Resilient Infrastructure under Climate Change:
How Rising Natural Hazards Affect Costs, Financing, and Insurance in DB(F)M Projects – Construction vs. Maintenance Phases, with a Focus on the Lyon–Turin Railway Project
Abstract
This thesis examines how climate‑driven natural hazards increasingly affect the design, financing, insurance and maintenance of large infrastructure projects, particularly those delivered under DB(F)M contractual models. It provides a structured and accessible synthesis of the main hazard categories, risk‑transfer mechanisms and cost implications associated with climate change, with the aim of supporting public and private stakeholders in understanding these evolving challenges. The research combines a targeted literature review, a clarification of key concepts, an analysis of cost pathways under climate risk, and an in‑depth case study of the cross‑border section of the Lyon–Turin railway project managed by TELT. The study concludes with the development of a website designed to guide practitioners in identifying risks, assessing impacts and integrating climate considerations throughout the lifecycle of major infrastructure assets.
Keywords : Resilient Infrastructure, Natural Hazards, DBFM, Insurance, TELT.
Disclaimers
Disclosure agreement
The author consents that this manuscript can be publicly shared for communication, teaching or further research purposes. However, not the first month because there is an NDA with the stakeholder TELT and they must validate the content concerning them before publication.
Generative AI use statement
AI was mainly used to translate and shorten or improve certain paragraphs. Due to the complexity of the subject and the amount of relevant information available, AI was also used to draft paragraphs based on specific questions formulated by the author, after selecting the articles and defining the structure of each section. In addition, for the Literature Review, AI was requested to summarise and cross‑analyse the information contained in thirty articles previously identified and selected by the author.
1 Introduction
1.1 General Context & Research Question
Will the 2026 El Niño evolve into a super El Niño? Will next summer’s heatwaves become truly unforgettable, making 2026 the hottest year ever recorded? And will the extreme hydrological events of the coming ten months partially damage our ageing infrastructure in Western Europe? Although future observations will confirm these trends, current evidence already indicates a clear intensification of extreme events. The rise in extreme weather events is one of the most visible consequences of undeniable climate change.
In parallel, in Western Europe, major infrastructure megaprojects have emerged since the beginning of the 21st century, while others—often even more complex—are currently in the design or construction phase. In which way are DB(F)M‑type infrastructure megaprojects in Europe prepared to integrate natural hazards amplified by climate change, and how does this influence their costs, insurance mechanisms and resilience strategies?
In this context of climate change and large construction megaprojects, are the main stakeholders of DB(F)M‑type projects sufficiently aware, informed and guided to face the challenges of the coming decades?
This work focuses on a review of the literature on the subject, including definitions, the identification of natural hazards and the different types of insurance.
A substantial part of the study then examines the Euralpin Lyon–Turin Tunnel (TELT) project, with a presentation of the project itself, including a package worth more than €3 billion currently in procurement, and its resilience to natural hazards. In a structured manner, numerous links and applications of theoretical notions from this Executive Master will be connected to the TELT project.
Finally, as a concrete output of this work, an informative website summarising most of the topics addressed is produced. This website is intended to provide basic knowledge, past experience and decision support for the various stakeholders. The idea is to eventually transpose it into a extended website or application to make it more practical and to support knowledge sharing.
1.2 Justification of the topic
1.2.1 Macro Context
Major infrastructure projects represent very large investments, often over 30 to 50 years, and are exposed to numerous risks. Among these, natural hazards are becoming increasingly significant in the context of climate change. The current decades are marked by the ageing of infrastructures built in the previous century, increased European regulatory pressure, a rise in the intensity of meteorological hazards, and a significant increase in insurance and reinsurance costs. These converging trends reinforce the need to integrate natural‑hazard risks into the planning, financing and governance of megaprojects.
1.2.2 Academic Importance
Although the literature covers infrastructure resilience and financial risk management, few studies focus on raising awareness of the topic, on providing a clear and operational structuring of relevant natural hazards, on offering accessible and synthesized information, or on the significant aspects of additional costs (financing, insurance and maintenance).
1.2.3 Practical Importance
Knowing and understanding how natural hazards affect costs and insurance helps authorities and companies make informed decisions. Beyond these two obvious stakeholders, and directly linked to DB(F)M megaprojects, investors, insurers, operators and other actors also have an interest in being aware of the issue, so as not to underestimate it, while avoiding turning it into an insurmountable or financially prohibitive obstacle.
1.2.4 Societal Importance
Knowing the risks and their impacts on a major infrastructure megaproject means being better able to anticipate them. Designing highly resilient structures therefore helps prevent major accidents and save lives. Interruptions caused by natural disasters can lead to massive economic losses for the State, local authorities and companies. Ensuring resilience and adequate insurance coverage helps preserve the continuity of transport, trade and public services, and thus avoid major socio‑economic impacts. Alpine territories, which are particularly affected by global warming, must strengthen their resilience, while European corridors are both potentially vulnerable and, paradoxically, part of the solution.
1.2.5 Relevance of the Case Study
The Lyon–Turin project illustrates these issues perfectly:
- large financial and technical scale
- probably exposure to major natural hazards
- strategic European importance
- rare opportunity to explore the link between “climatic” risks, financing, insurance and maintenance in a DB(F)M context
In addition, a TELT public contract—lot T15, currently in the procurement phase—is exceptional due to its budget, its duration, its cross‑border dimension and the presence of major natural hazards. TELT therefore constitutes a unique analytical setting for exploring climate resilience within a European megaproject.
1.2.6 Highly Topical
The relevance of this topic is also reflected in current discussions within the construction sector. The main theme of the ADEB‑VBA Annual Meeting in June 2025 was dedicated to adaptation to climate disruptions. Professors Jacques Teller and Patrick Willems presented forward‑looking perspectives on how to make infrastructure more resilient. This confirms that climate‑related risks and resilience strategies are now central concerns for industry stakeholders, including the institutions co‑organizing this Executive Master.
1.3 Research objectives
The overall objective of this research is to analyse how climate‑driven natural hazards affect the costs, financing mechanisms and insurance strategies of DB(F)M‑type megaprojects, and to assess how public authorities, contractors and financial actors can better anticipate these impacts. Building on the general context and justification presented above, the research pursues five complementary objectives.
1.3.1 Develop a structured and accessible knowledge base on natural hazards and their financial implications
Consolidate and clarify key definitions related to natural hazards, climate change, risk allocation, insurance and DB(F)M contractual frameworks. Provide a cross‑disciplinary bridge between natural‑hazard specialists, project financiers, insurers and project managers by explaining the fundamentals of each domain in a clear and operational manner. Produce a synthetic and accessible decision‑support tool (flowchart) that brings together the main concepts relevant for practitioners.
1.3.2 Assess the financial impact of climate‑amplified natural hazards on construction and maintenance phases
Identify and analyse the main categories of natural hazards relevant to major infrastructure projects in Western Europe. Examine how these hazards influence construction costs, maintenance costs, contingencies, insurance premiums and long‑term financial exposure.
1.3.3 Analyse how DB(F)M projects currently integrate natural‑hazard risks
Identify gaps, recurring issues and lessons learned regarding risk allocation, insurance coverage and financial structuring. Evaluate whether current practices sufficiently reflect the increasing intensity and frequency of climate‑related hazards.
1.3.4 Apply these insights to a major ongoing case: the Lyon–Turin railway project (TELT)
Present the project and analyse its exposure to natural hazards, with a specific focus on the cross‑border alpine environment. Examine the €3‑billion T15 DBM contract currently under procurement and assess how climate‑related risks may affect its construction and O&M phases. Connect theoretical concepts from the Executive Master courses to the practical governance, financing and risk‑management mechanisms used by TELT.
1.3.5 Provide actionable guidance for public authorities, insurers, funders and contractors
Translate academic and technical insights into practical recommendations for decision‑makers involved in DB(F)M megaprojects. Support more informed procurement strategies, risk‑allocation mechanisms and insurance approaches. Contribute to improving the resilience, financial predictability and long‑term sustainability of major infrastructure projects in Europe.
2. Literature Review
This literature review synthesises insights from 28 selected scientific and institutional sources [1] until [28], covering climate impacts on infrastructure, natural hazards, PPP/DBFM governance, risk allocation, insurance mechanisms and resilience strategies. The review integrates these contributions into a coherent analytical framework tailored to long‑term infrastructure delivery models.
2.1 Introduction
Climate change is reshaping the risk landscape for long‑lived infrastructure assets. Transport systems — especially railways — face increasing exposure to floods, landslides, heatwaves, freeze–thaw cycles, storms, droughts, and geotechnical instabilities. These hazards disrupt service continuity, increase lifecycle costs, and challenge traditional financing and delivery models.
Across the literature, a clear consensus emerges: resilience must be embedded across the entire infrastructure lifecycle, not treated as a post‑event corrective measure. This is particularly relevant for PPP/DBFM contracts, where long‑term performance obligations, risk transfer mechanisms, and lifecycle incentives create both opportunities and vulnerabilities. The 24 reviewed sources span:
- Climate impacts on railway infrastructure (ClimRail [1] , Duvillard et al. [2] [3])
- Resilience governance and public investment frameworks (OECD 2024 [4])
- CCA–DRR integration (Majlingova & Kádár 2025) [5]
- PPP risk allocation under climate uncertainty (World Bank PPP Reference Guide [6], OECD [4] [7], G20 [7])
- Insurance and reinsurance approaches (Swiss Re NCME [8], Munich Re [9], Lonergan et al. 2023 [10])
- Stress‑testing and emerging risks (Jovanović 2025 [11])
- Damage assessment and monitoring tools (Nepal et al. 2021 [12]; Buffarini et al. 2022 [13])
This review synthesises these contributions through a PPP/DBFM lens, focusing on how climate risks affect risk allocation, financing, maintenance obligations, insurance structures, and long‑term asset performance.
2.2 Conceptual Foundations: Risk, Vulnerability and Resilience in PPP Contexts
2.2.1 Climate and Natural Hazard Risks
The IPCC risk framework (hazard × exposure × vulnerability) underpins most studies. ClimRail and SMHI highlight how climate trends alter failure modes in rail systems. IMF and OECD emphasise that climate risks generate systemic macro‑fiscal impacts, directly relevant for governments entering long‑term PPP commitments.
For PPPs, this means: baseline risk assessments become obsolete over a 25–40‑year concession, climate uncertainty undermines traditional risk transfer, and contractual rigidity can amplify losses.
2.2.2 Infrastructure Vulnerability
Railway assets show specific sensitivities: rail buckling under heat, platform and embankment failures under extreme rainfall, permafrost‑related instabilities (Duvillard et al. 2021; Marcer et al. 2019), ageing assets and insufficient preventive maintenance.
In DBFM contracts, these vulnerabilities translate into: higher lifecycle O&M costs, potential uninsurability of certain risks, disputes over “relief events” and “change in law”, pressure on availability‑based payment mechanisms.
2.2.3 Resilience as a Multidimensional Concept
Majlingova & Kádár (2025) and Jovanović (2025) emphasise resilience as: absorptive capacity, adaptive capacity, transformative capacity.
For PPPs, this aligns with: design‑for‑resilience obligations, adaptive maintenance regimes, stress‑testing of concession performance, integration of resilience KPIs into payment mechanisms.
2.3 Climate Change Impacts on Infrastructure and PPP Performance
2.3.1 Observed Climate Trends
ClimRail and SMHI document: more days >25°C, more extreme precipitation, more rain‑on‑snow events, shifting freeze–thaw patterns.
These trends directly affect DBFM performance regimes, especially where availability deductions apply.
2.3.2 Evolution of Failures
ClimRail reports an upward trend in climate‑related disruptions (2001–2018). Permafrost studies (Duvillard et al., Marcer et al.) show accelerating destabilisation of high‑altitude infrastructure.
In PPPs, this implies: baseline maintenance assumptions become invalid, contractors face unanticipated cost escalation, governments face renegotiation risks.
2.3.3 Economic Impacts
IMF and OECD estimate billions in annual losses for transport infrastructure. For PPPs, climate impacts can: erode private sector margins, trigger compensation events, increase insurance premiums, reduce bankability unless risks are clearly allocated.
2.4 Adaptation Approaches and Resilience Strategies in PPP/DBFM
2.4.1 Protect–Accommodate–Retreat Framework
Table 1 ClimRail’s triptych aligns well with PPP lifecycle logic:
| Adapation Strategy | PPP, DBFM, Implications |
|---|---|
| Protect | CAPEX adjustments; design obligations; insurance requirements |
| Accomodate | O&M adaptations; performance regime adjustments |
| Retreat | Major scope changes; renegotiation; termination compensation |
2.4.2 Nature‑Based Solutions (NBS)
Majlingova & Kádár show NBS reduce long‑term costs and risks. For PPPs: NBS can reduce lifecycle O&M costs, but require performance‑based monitoring and clear contractual definitions.
2.4.3 Railway‑Specific Adaptation
ClimRail proposes RCM (Reliability‑Centered Maintenance), FTA/ETA modelling, and climate‑adjusted maintenance schedules.
In DBFM: these tools support predictive maintenance, reduce availability deductions, and strengthen bankability through risk transparency.
2.5 Governance, Financing and PPP Risk Allocation
2.5.1 Public Investment Governance (IMF, OECD)
IMF and OECD emphasise: climate‑informed project appraisal, integration of resilience into CBA, multi‑hazard risk screening.
For PPPs, this means: resilience must be embedded before tender, risk allocation must reflect climate uncertainty, governments must avoid transferring unmanageable risks.
2.5.2 CCA–DRR Integration in Policy
Countries integrating CCA–DRR (Fiji, Mexico, NL) show: better alignment of PPP frameworks with climate policy, clearer definitions of force majeure vs. climate‑induced degradation.
2.5.3 Climate Risks and PPP Contracts (World Bank)
The PPP Reference Guide and World Bank climate reports highlight: contractual rigidity as a major barrier, information asymmetry between public and private parties, uninsurable risks increasing over time.
Recommended mechanisms: climate‑indexed performance standards, mandatory insurance layers, resilience‑linked payment adjustments, climate‑resilient design codes.
2.6 Insurance, Reinsurance and Financial Risk Transfer in PPPs
2.6.1 Reinsurance Modelling (Swiss Re NCME)
Swiss Re’s NCME provides: 160+ NatCat models, granular risk scoring, API‑based integration into pricing tools.
For PPPs: supports bankability assessments, informs insurance requirements, enables climate‑adjusted lifecycle costing.
2.6.2 Catastrophe Bonds and Parametric Insurance
CAT bonds (CPI 2023) and parametric triggers: provide rapid liquidity, reduce fiscal exposure, can be embedded in PPP risk‑sharing frameworks.
2.6.3 Resilience‑Based Insurance (Lonergan et al. 2023)
Insurers increasingly promote: resilience‑linked premiums, parametric products, stress‑testing of infrastructure portfolios.
For DBFM: incentivises resilient design, stabilises O&M budgets, reduces renegotiation risk.
2.7 Digital Tools, Monitoring and Stress‑Testing
2.7.1 Post‑Hazard Assessment
Nepal et al. (2021) highlight UAVs, TLS, and satellite imagery for rapid diagnostics — essential for PPPs where availability payments depend on rapid restoration.
2.7.2 Continuous Monitoring
Buffarini et al. (2022) propose CIPCast‑DSS for real‑time impact modelling. In DBFM: supports performance monitoring, reduces disputes, enables predictive maintenance.
2.7.3 Stress‑Testing (Jovanović 2025)
Stress‑testing against extreme threats (X‑threats) aligns with: lender requirements, insurance underwriting, PPP risk matrices.
2.8 Synthesis: Convergences
Across the 28 sources: climate change alters risk profiles, resilience requires systemic integration, digital tools are essential, governance and financing matter as much as engineering.
2.9 Conclusion: Towards Climate‑Resilient PPP/DBFM Infrastructure
The literature shows that PPP/DBFM models must evolve to remain viable under climate change. Four pillars emerge:
A) Risk Understanding
Climate‑adjusted hazard modelling (ClimRail, Swiss Re, IMF, OECD).
B) Technical & Operational Adaptation
RCM, NBS, geotechnical adaptation, predictive maintenance.
C) Resilient Governance & Financing
Climate‑informed appraisal, adaptive contracts, insurance integration.
D) Digital Tools & Monitoring
BIM, IAM, CIPCast, UAV/TLS diagnostics, stress‑testing.
For PPPs, this means: resilience must be contractually embedded, risk allocation must reflect climate uncertainty, insurance and reinsurance must be integrated into financial structuring, monitoring must be continuous, adaptation must be lifecycle‑driven.
This integrated approach is essential for ensuring that long‑term PPP/DBFM infrastructure remains bankable, insurable, and operational in a rapidly changing climate.
3. Identification of Natural Hazards
The United Nations Office for Disaster Risk Reduction (UNDRR) classifies natural hazards into several categories
3.1 Geophysical
The first category concerns geophysical hazards, which originate from the Earth’s internal or surface processes and can directly affect linear and underground infrastructure. This category includes earthquakes, fault ruptures, liquefaction, landslides, rockfalls, rock-ice avalanches, debris flows and sinkholes.
Rockfalls are particularly relevant to this case study. A recent example is the collapse of approximately 15,000 m³ of rock on 27 August 2023, which led to the closure of the A43 motorway for several days and the interruption of the Fréjus railway line (Paris–Milan connection) for 19 months. It is also important to note that the La Praz rockfall occurred at a location where the future railway line will run deep underground, in tunnel, and is therefore not exposed to rockfall hazards.
Rock‑ice avalanches, although rare, can occur in glaciated alpine environments. A recent event is the Blatten disaster of 28 May 2025, involving more than 6 million m³ of rock and 3 million m³ of ice. For the Lyon–Turin railway project, the surrounding Mont‑Cenis and Maurienne massifs do not contain large debris‑laden glaciers comparable to the Birch Glacier. Consequently, a glacier‑supported collapse similar to the Blatten event is considered highly unlikely in this region.
3.2 Hydrological
Beyond geophysical processes, infrastructure is also exposed to hydrological hazards, which are strongly influenced by climatic conditions and are expected to intensify in Alpine regions. This category includes floods, flash floods, storm surge, scour and glacial lake outburst flood (GLOF).
A recent example of flash flooding in the Alps is the Bérarde disaster of 21 June 2024, an extreme torrential event that transported several hundred thousand cubic metres of rock and debris. This occurred approximately 40 km from Saint‑Jean‑de‑Maurienne, the western entrance of the cross‑border tunnels. In this case, the event resulted from a combination of intense torrential runoff and the likely drainage of a supraglacial lake.
Such events illustrate the increasing vulnerability of Alpine valleys to extreme hydrological processes. For future transport infrastructure in the Alps, several design adaptations will be necessary: bridges will need to be built higher, with longer spans, and with piers capable of resisting impacts from rocks, tree trunks, and other debris transported by high‑energy flows. Railway lines should avoid being placed too deeply in valley floors, where water levels may rise significantly higher than in previous decades. Crossings over perpendicular ravines must also be reinforced and elevated to withstand more frequent and more intense flash‑flood events.
3.3 Climatic / Atmospheric
In addition to hydrological processes, climatic and atmospheric hazards represent a growing source of stress for transport infrastructure, particularly under rising temperatures. Climatic and atmospheric hazards include heatwaves, droughts, extreme rainfall, windstorms, tornadoes, hail, and wildfires.
Rising temperatures have several direct consequences for railway infrastructure. Higher rail temperatures increase the risk of track buckling, requiring reinforced ballast‑shoulder crests to counteract the greater lateral forces exerted on the rails. They also necessitate more frequent ground‑based inspections by maintenance teams, complemented by sensor‑based monitoring systems.
Overhead line equipment (OLE) must also be adapted: larger conductor cross‑sections, reinforced counterweight and tensioning systems, and oversized supports and brackets are increasingly required to withstand thermal expansion and higher mechanical stresses. Heatwaves also increase thermal stresses on bridges and viaducts, which may require more robust, and therefore more expensive, expansion joints. Finally, extreme heat has a direct operational impact, as it often requires speed restrictions, which in turn affect commercial performance.
3.4 Cryospheric
In high‑altitude environments, climatic hazards interact with cryospheric processes, which can generate sudden and destructive events affecting mountain corridors. This category includes snow avalanches, ice avalanches and permafrost degradation (driver).
4.5 Geotechnical
Finally, natural hazards also include geotechnical processes, which may be exacerbated by climatic variations and can affect the long‑term stability of foundations and earthworks. This category includes clay shrinkage, soil swelling and subsidence.
| Hazard Category | Typical Impact on DBFM Rail/Tunnel Projects | Impact Weighting | Expected Evolution Linked to Climate Change |
|---|---|---|---|
| Geophysical | Structural damage to tunnels, portals, bridges; slope instability; long‑term closures; emergency repairs | High (site‑dependent) | Slight increase in landslides and debris flows due to more intense rainfall; limited change for tectonic hazards; increased rock‑ice instabilities in glaciated areas |
| Hydrological | Damage to bridges, embankments, culverts; scour at foundations; track washouts; operational shutdowns | Very High in Alpine valleys | Strong increase in flash floods, torrential flows, debris‑laden floods; higher peak discharges; more frequent GLOFs |
| Climatic / Atmospheric | Track buckling, OLE failures, speed restrictions, reduced commercial performance; thermal stresses on bridges | High | Significant increase in heatwaves, extreme rainfall, convective storms; more frequent speed restrictions; higher maintenance costs |
| Cryospheric | Damage to surface structures, portals, galleries; slope instability; rock‑ice detachment | Medium to High (depending on altitude) | Reduction in snow avalanches at low altitude; increase in wet‑snow avalanches; more rock‑ice collapses; permafrost degradation destabilising slopes |
| Geotechnical | Track geometry deformation; foundation instability; long‑term maintenance costs | Medium | Increased soil shrink–swell cycles due to drought/rewetting; higher subsidence risk in dry summers |
4. Risks, Insurances and Cost
4.1 Overview & General Framework
4.1.1 Role of Insurance in DB(F)M Projects
In DBFM projects, insurance plays a central role: beyond regulatory compliance, it is a key mechanism for transferring risk and ensuring the project’s financial viability. Without a solid insurance structure, the project often won’t reach financial close.
The main roles are:
-Transfer major risk (accident, construction, defects)
-Protect lenders (banks require it before financing)
-Stabilize cashflow (critical for repayment models)
-Backstop contractor liabilities
Other roles like the cover of repair an infrastructure and the loss of revenue during a closure after an insured peril (like a natural hazard) is also a roles to mention in the frame of this Capstone Thesis. In this case we speak about property damage & business interruption. It is not always covered if, for example, the natural hazard risk was considered predictable/know or if there is failure in preventive measures or no physical damage at the infrastructure.
4.1.2 Risk Transfer & Contractual Context
Insurance does not create risk transfer, the contract does.
4.2 The five major families of insurance relevant to DB(F)M Projects
This table provides the full insurance list form DB(F)M Projects
| Insurance | French’name | Definition | Advantage, Disadvantage & Characteristics |
|---|---|---|---|
| Construction All Risks (CAR) | Tous Risques Chantier (TRC) | Covers physical damage to works, equipment, and materials during construction | + Broad coverage; – many exclusions; sensitive to geotechnical uncertainty |
| Machinery Breakdown (MB) | Bris de Machine | Covers sudden and accidental damage to machinery | + Essential for heavy equipment; – excludes wear and tear |
| Property Damage (PD) | Dommages aux biens | Covers physical damage to assets during operation | + Key O&M protection; – depends on maintenance quality |
| Material Damage (MD) | Dommages matériels | Covers physical damage to materials and structures | + Simple; – often limited in scope |
| Business Interruption (BI) | Perte d’exploitation | Covers financial losses due to operational downtime | + Protects revenue; – requires a material damage trigger |
| General Liability (GL) | Responsabilité civile générale | Covers third‑party bodily injury and property damage | + Essential; – pollution/cyber often excluded |
| Third‑Party Liability (TPL) | RC envers tiers | Covers damages caused to third parties by construction activities | + Mandatory; – depends on contractual risk allocation |
| Environmental Liability (EL) | RC environnementale | Covers environmental damage caused by project activities | + Mandatory in some jurisdictions; – strict exclusions |
| Professional Indemnity (PI) | RC professionnelle | Covers design and engineering errors | +Protects designers; – costly for tunnels |
| Decennial Insurance | Assurance décennale | Covers major structural defects for ten years after completion | + Mandatory in France; – expensive |
| Advanced Loss of Profit (ALOP) | Perte de profit anticipée | Covers financial losses due to delayed commissioning | + Protects revenue; – depends on CAR coverage |
| Delay in Start‑Up (DSU) | Retard de mise en service | Covers financial losses from delays caused by insured events | +Key in DBFM; – strict conditions |
| Erection All Risks (EAR) | Tous risques montage | Covers installation and erection of electromechanical systems | + Essential for rail systems; – technical exclusions |
| Contractors’ Plant & Equipment (CPE) | Assurance matériel de chantier | Covers construction machinery and site equipment | + Protects mobile assets; – theft and weather exposure |
| TBM Insurance (TBM) | Assurance tunnelier | Covers damage to the tunnel boring machine | + Critical for tunnelling; – very expensive |
| Equipment Breakdown Insurance (EBI) | Bris d’équipement (O&M) | Covers equipment failures during operation | + Supports availability; – excludes wear |
| Contractors’ Pollution Liability (CPL) | RC pollution chantier | Covers accidental pollution during construction | + Specific coverage; – many exclusions |
| Cyber Liability (CYBER) | RC cyber | Covers cyberattacks affecting project systems | + Essential for SCADA (Supervisory Control And Data Acquisition); – volatile market |
| Workers’ Compensation (WC) | Accident du travail | Covers workplace injuries and accidents | + Mandatory; – varies by jurisdiction |
| Service Interruption (SI) | Interruption de service | Covers losses from non‑material service interruptions | + Useful for rail; – rarely included |
| Maintenance Performance Insurance (MPI) | Assurance performance maintenance | Covers penalties for failing to meet O&M performance targets | + Protects concessionaire; – limited availability |
| Parametric Natural Hazard | Assurance paramétrique climatique | Pays automatically based on a climate index threshold | + Fast payout; – requires precise calibration |
| Catastrophe Excess of Loss (Cat XL) | Excédent de sinistre catastrophe | Covers losses above a threshold during catastrophic events | + Protects against extreme losses; – high premiums |
| Flood Insurance | Assurance inondation | Covers damage caused by flooding | + Targeted coverage; – exclusions in high‑risk zones |
4.2.1 Property and Construction Damage Insurance
Property and construction damage insurance mainly covers material losses affecting structures, equipment, and project assets. In DB(F)M projects, this type of insurance plays a key role during the construction phase, protecting against risks such as fires, floods, collapses, technical defects, or geotechnical damage. For complex infrastructure like Alpine tunnels, these policies must account for high levels of uncertainty linked to geological and climatic conditions.
It includes: Construction All Risks (CAR / TRC), Machinery Breakdown, Property Damage (PD), Material Damage (MD), Erection All Risks (EAR), Contractors’ Plant & Equipment (CPE), TBM Insurance (tunneller) and Equipment Breakdown Insurance (EBI) as these logically relate to direct damage affecting assets, structures, machinery, equipment and construction works.
The ten-year liability insurance (“décennale”) constitutes a separate category, but if it must be classified, it also belongs to this family as it covers major damage affecting the structure’s integrity or fitness for purpose over a ten-year period. It’s mandatory in some jurisdictions (e.g., France).
4.2.2 Third-Party Insurance
Third‑party liability insurance covers damage caused to external parties during the construction or operation of the infrastructure. This includes bodily injury, environmental damage, or losses resulting from design errors. In DB(F)M projects, the contractual allocation of responsibilities between the public authority, contractors, operators, and subcontractors is a major governance and risk‑management issue.
It includes: General Liability Insurance, Third-Party Liability Insurance, Environmental Liability Insurance, Contractors’ Pollution Liability (CPL), Cyber Liability Insurance, Employer’s Liability / Workers’ Compensation and (also here) Professional Indemnity (PI) as these logically relate to general civil liability, third-party damages, pollution and environmental harm.
4.2.3 Operational & Maintenance Insurance
Operational and maintenance insurance becomes particularly important in DBFM contracts, where the private partner remains responsible for the availability and performance of the infrastructure over several decades. These policies typically cover operational interruptions, technical failures, equipment damage, and certain long‑term maintenance risks.
It includes: Business/Service Interruption (BI), Property Damage (PD) (during the operational phase), Equipment Breakdown Insurance (EBI) (during O&M phase) and Maintenance Performance Insurance as these logically relate to business continuity, operational losses and technical failures during the O&M phase.
4.2.4 Financial & Credit Insurance
Financial and credit insurance helps secure the financing structure of large infrastructure projects. It protects lenders, investors, and public authorities against risks such as default, delays, insolvency, or contractual non‑performance. In PPP and DBFM frameworks, these instruments are essential to ensuring the bankability of the project.
It includes: Advanced Loss of Profit (ALOP) & Delay in Start-Up (DSU), Performance Bond, Advance Payment Bond, Retention Bond and Surety Bond as these logically relate to financial losses resulting from delays in commissioning or from insured events covered under the CAR policy.
4.2.5 Natural Hazard & Climate Risk Insurance
The rise in extreme climate‑related events increases the importance of insurance policies covering natural hazards and climate risks. These include floods, landslides, storms, heatwaves, and geotechnical instabilities. In the case of the Lyon–Turin railway project, the Alpine environment makes it even more necessary to integrate natural and climate‑related hazards into insurance strategies and into the overall approach to infrastructure resilience.
It includes: Construction All Risks (CAR) (the “forces of nature” component), Property Damage (PD) (when natural catastrophes are covered), Material Damage (MD) (when natural catastrophes are covered), Parametric Natural Hazard Insurance, Catastrophe Excess of Loss (Cat XL) and Flood Insurance specific as these policies logically include coverage for “acts of nature” such as floods, earthquakes and storms.
4.3 Major Reinsurers in Climate Risk Management
Munich Re (Germany), one of the world’s largest reinsurers, known for its strong expertise in natural hazard modelling and climate‑risk analysis, especially relevant for large infrastructure projects.
Swiss Re (Switzerland), a global leader in reinsurance and risk analytics, with recognised experience in Alpine hazards and long‑term climate resilience for major transport infrastructures.
SCOR (France), France’s leading reinsurer, active in PPP and DBFM projects, with solid expertise in geotechnical and hydrometeorological risks in European infrastructure.
4.4 Financial Aspects
4.4.1 Premium Settings and Risk Assessment
Natural catastrophe reinsurance increasingly relies on advanced risk assessment and premium-setting methodologies based on catastrophe modelling, exposure analysis and climate-related data. Large reinsurers such as Munich Re and Swiss Re use proprietary NatCat models to improve risk selection, pricing accuracy and accumulation control. These approaches are becoming particularly important as climate change increases the frequency and severity of natural hazards, leading insurers and reinsurers to integrate more detailed assessments of exposure, vulnerability and resilience into underwriting practices. In long-term DB(F)M infrastructure projects, these mechanisms may directly influence insurance premiums, financing conditions and incentives for preventive maintenance and climate adaptation measures. [40] [41]
4.4.2 Reinsurance and Risk Sharing
Reinsurers play an increasingly important role in climate-related infrastructure risks by enabling the international sharing and transfer of losses linked to floods, storms, heatwaves and other extreme weather events. According to GFDRR, OECD and the Insurance Development Forum (IDF), reinsurance markets contribute not only through financial capacity, but also through catastrophe modelling, climate-risk analytics and resilience expertise. These mechanisms help insurers and infrastructure investors manage rising uncertainty associated with climate change while maintaining the insurability of large infrastructure assets and DB(F)M projects. Reinsurance also supports risk mutualization at a global scale by spreading climate-related losses across different countries and portfolios, thereby reducing the concentration of exposure in highly vulnerable regions. [4] [7] [42]
4.4.3 Cost Impact on DB(F)M Projects
Climate change is increasingly affecting the cost structure of DB(F)M infrastructure projects through rising natural catastrophe losses, higher insurance premiums and stricter underwriting conditions. According to Munich Re and Swiss Re, insured losses linked to weather-related disasters have exceeded USD 100 billion annually for several consecutive years, with floods, storms, wildfires and other “secondary perils” showing particularly strong growth. Munich Re estimates that aggregate losses from these secondary climate-related hazards have increased significantly and more than tripled since the early 2000’s in some regions, while insured losses have increased nearly sixfold. At the same time, reinsurers are progressively increasing premium levels and strengthening risk assessment requirements due to higher climate uncertainty and exposure accumulation. These trends directly affect large infrastructure and DB(F)M projects by increasing construction insurance costs, operational insurance costs, contingency requirements and long-term lifecycle expenditures. As a result, resilience investments and preventive maintenance are increasingly viewed as necessary measures to maintain insurability and financial viability over the project lifecycle. [43] [44]
4.5 Insurance Challenges and Trends
4.5.1 Climate Change and Increasing Natural Hazard Exposure
Climate change is increasing the exposure of infrastructure projects to natural hazards such as floods, storms, heatwaves and wildfires. According to Munich Re and Swiss Re, the frequency and severity of weather-related disasters have significantly increased over the past decades, leading to rising insured losses and greater uncertainty for insurers and investors. This growing unpredictability contributes to higher insurance premiums, stricter underwriting conditions and increased volatility in infrastructure financing and lifecycle costs. In some highly exposed areas, insurers have even started to reduce coverage capacity or withdraw from certain markets, creating concerns about the future insurability of climate-vulnerable assets. These trends are particularly relevant for long-term DB(F)M projects, where climate risks may affect both construction and O&M phases over several decades. [4] [44] [45]
4.5.2 Emerging Risk in Alpine / High-Risk Infrastructure
Emerging climate-related risks are becoming a major concern for Alpine and high-risk infrastructure projects. In mountain regions such as the Alps, rising temperatures accelerate glacier retreat and permafrost degradation, which can destabilize rock slopes and increase the occurrence of landslides, rockfalls, debris flows and flooding events. Several studies highlight that these processes directly threaten transport infrastructure, tunnels, railways and energy networks located in high mountain environments. Researchers also note that many Alpine infrastructures were originally designed for historical climate conditions and may therefore face increasing maintenance costs, monitoring requirements and adaptation needs. As climate uncertainty grows, Alpine infrastructure projects are progressively exposed to higher operational, financial and insurance-related risks over their lifecycle. [2] [3]
4.5.3 Innovative Risk Transfer Solutions
We refer here to the journal paper [10] which discusses critical infrastructure, climate change, parametric insurance and new resilience-oriented insurance products. The article is interesting because it highlights possible future insurance models for DBFM projects and also helps explain why insurers increasingly encourage operators to invest in preventive maintenance.
Parametric insurance is a type of insurance where compensation is triggered automatically when a measurable parameter exceeds a predefined threshold (such as rainfall, flood level, wind speed or earthquake magnitude), rather than being based on the actual assessment of damages. Once the threshold is reached, the insured party receives a fixed payment without the need for on-site loss assessment
Catastrophe Bonds are high-yield debt instruments designed to transfer financial risks associated with natural disasters from insurers or governments to capital market investors. They provide insurers with funds in case of triggering events such as hurricanes, earthquakes, or pandemics. Investors earn interest over the bond’s term, but risk losing their principal if a disaster triggers a payout. [28]
Resilience bonds are an evolution of catastrophe bonds designed to reward investments in resilience and risk reduction measures. They aim to link insurance and financial mechanisms with preventive actions that reduce the exposure and vulnerability of infrastructure to natural hazards and climate-related risks.
4.6 Global Committees and Associations for (natural) risk management
Natural hazards are managed internationally through a group of institutions that help structure risk understanding, governance and financing. These organizations play an important role for infrastructure projects, especially in DB(F)M schemes where resilience, insurance and climate-related risks are becoming increasingly important. The ten institutions presented below are among the most influential actors involved in the prevention, assessment and transfer of natural hazard risks at the global level. Next table provides an overview of this group of institution group.
| Category | Organization | Description / Role |
|---|---|---|
| UN System | UNDRR – United Nations Office for Disaster Risk Reduction | Coordinates global disaster risk reduction policy |
| UNDP – United Nations Development Programme | Implements resilience and risk management programs in developing countries | |
| Insurance & Reinsurance | Geneva Association | Global think tank for insurance CEOs; publishes research on climate risk and resilience |
| Insurance Development Forum (IDF) | Public–private partnership between UN, World Bank, and insurance industry to integrate risk management into development | |
| International Association of Insurance Supervisors (IAIS) | Sets global standards for insurance regulation | |
| Disaster Risk Science & Engineering | IRDR – Integrated Research on Disaster Risk (ICSU/UNESCO/ISDR) | Scientific program linking natural hazard research and policy |
| GFDRR – Global Facility for Disaster Reduction and Recovery (World Bank) | Funds and coordinates resilience projects worldwide | |
| Finance & Infrastructure Resilience | OECD High-Level Risk Forum | Focuses on systemic risk governance and resilience of critical infrastructure |
| World Bank Disaster Risk Financing and Insurance Program (DRFIP) | Develops financial instruments for disaster risk management | |
| Global Resilience Partnership (GRP) | Coalition of public and private actors promoting climate resilience |
4.7 Cost pathways under climate risk
The growing exposure of infrastructure assets to climate‑driven natural hazards is reshaping the cost structure of DB(F)M projects. Three main cost pathways can be distinguished.
First, direct costs are rising as climate‑amplified events. Such as slope instabilities, flooding, freeze–thaw cycles or geotechnical failures, cause more frequent damage, service disruptions and corrective‑maintenance needs.
Second, indirect costs are increasing through higher insurance and reinsurance premiums, reduced underwriting capacity and broader exclusions, as insurers integrate climate uncertainty into their pricing models.
Third, systemic costs are becoming more prominent due to material‑price inflation, supply‑chain disruptions, schedule delays, performance penalties and the growing need for preventive maintenance and resilience measures. Together, these pathways generate a multidimensional financial burden for DB(F)M projects, reinforcing the need to anticipate climate risks from design through operation. Integrating climate resilience into financial planning, risk allocation and insurance strategies has become essential for the long‑term viability and insurability of major infrastructure assets.
4.8 Limits of Financing and Insurability under Climate Risk
As climate‑related hazards intensify, DB(F)M projects increasingly face a structural tension between rising risk levels and the financial and insurance capacities required to absorb them. Evidence from insurers, development banks and climate‑risk modelling shows that certain combinations of physical and transition risks may push long‑term infrastructure projects toward thresholds of non‑insurability or non‑bankability. [49] [50] Insurance markets already exhibit clear signs of stress: premiums are rising, underwriting standards are tightening, and capacity is being reduced in high‑exposure regions. In some segments, insurers have begun to partially withdraw from markets where climate‑related losses are becoming too volatile or too correlated to be pooled efficiently. These dynamics directly affect lifecycle costs and can jeopardise the financial equilibrium of availability‑based PPP contracts.
From a financing perspective, climate‑driven increases in CAPEX and OPEX, stemming from design adaptations, protective structures, enhanced monitoring, and higher insurance premiums, translate into heavier annual cash‑flow requirements. As highlighted by the European Investment Bank’s ADAPT initiative, lenders increasingly scrutinise climate‑risk exposure when assessing project bankability, and may require additional reserves, higher debt‑service coverage ratios, or public guarantees. [49] When these additional costs materially reduce the project’s IRR or exceed lenders’ risk tolerance, the project may no longer be financeable without contractual adjustments or public‑sector risk‑sharing mechanisms.
Advanced climate‑risk models reinforce this concern. The Climate Extended Risk Model (CERM) demonstrates that under certain NGFS or IEA scenarios, physical and transition risks can significantly increase both expected and unexpected losses in credit portfolios, potentially exceeding insurers’ risk appetite or the capital buffers required under prudential regulation. [50] This is particularly relevant for low‑frequency/high‑severity hazards such as extreme floods, debris flows, compound events or cascading failures. In parallel, recent economic reviews of climate adaptation (Josephson et al., 2024) show that adaptation costs are often underestimated, that uncertainty remains high, and that climate‑related losses may surpass the financial capacity of both insurers and public authorities—creating a widening “financing and insurability gap”. [51]
Understanding how these thresholds evolve, and under which conditions they may be reached, is becoming essential for the long‑term viability of DB(F)M megaprojects. While this thesis primarily adopts a qualitative perspective, identifying the financial and insurability limits of climate‑exposed infrastructure represents a critical area for future analytical development. A quantitative decision‑support model linking hazard intensity to CAPEX/OPEX variations, cash‑flow impacts and IRR sensitivity would help determine when risks cease to be transferable to insurers or compatible with long‑term project financing. [49] [50] [51]
5. Conclusion
This thesis demonstrates that climate‑driven natural hazards are reshaping the financial, technical and insurance landscape of DB(F)M infrastructure projects. The analysis of geophysical, hydrological, atmospheric, cryospheric and geotechnical hazards shows a clear upward trend in frequency, severity and unpredictability, leading to rising direct costs (damage, repairs, service interruptions), indirect costs (insurance premiums, exclusions, deductibles) and systemic costs (inflation, delays, performance penalties). These findings confirm that climate risk must be treated not as an externality but as a structural parameter influencing design, financing, risk allocation and long‑term maintenance.
The case study of the Lyon–Turin cross‑border section illustrates that a project can achieve a high level of preparedness through robust governance, advanced monitoring systems, comprehensive geological studies and explicit integration of natural hazards into contractual frameworks. However, persistent climatic uncertainty—particularly in alpine environments—requires continuous adaptation of technical, financial and insurance practices. The TELT project shows strong maturity, yet it also highlights the limits of current models when confronted with emerging risks such as extreme precipitation, slope instability or cryospheric degradation.
Based on these insights, several recommendations emerge for public authorities, insurers, funders and private contractors:
- Integrate climate risk early and systematically into feasibility studies, cost modelling, and DB(F)M tender documents, using recognised frameworks such as the IPCC risk model or the World Bank’s Resilience Rating System.
- Strengthen preventive maintenance and monitoring, as insurers increasingly require continuous data (e.g., geotechnical sensors, hydrological monitoring, structural health monitoring) to maintain insurability.
- Adopt innovative risk‑transfer instruments, including parametric insurance, catastrophe bonds, resilience bonds or captive structures, as promoted by organisations such as the Insurance Development Forum (IDF), Swiss Re, Munich Re and AXA Climate.
- Collaborate with specialised institutions such as UNDRR, GFDRR, EIOPA, OECD and national geological services to improve hazard mapping, scenario modelling and long‑term adaptation strategies.
- Revisit contractual risk allocation in DB(F)M models to reflect the increasing volatility of climate‑related hazards, ensuring that risks are allocated to the parties best able to manage them without compromising project viability.
- Promote knowledge‑sharing platforms and cross‑border cooperation, especially for alpine or transnational infrastructure, where climate impacts do not respect administrative boundaries.
The website developed in this thesis synthesises these findings and provides a practical tool to guide stakeholders in identifying hazards, assessing cost pathways and structuring appropriate mitigation and insurance strategies. Overall, European DB(F)M projects are progressing toward a more systemic integration of climate risk, but their level of preparedness remains uneven and highly dependent on institutional maturity, data availability and the quality of the tools employed. Continued investment in resilience, monitoring and innovative insurance mechanisms will be essential to ensure the long‑term sustainability and financial predictability of major infrastructure assets under accelerating climate change
Looking ahead, a key avenue for future work is the development of quantitative decision‑support models capable of translating climate‑related hazards into financial metrics relevant for DB(F)M projects.
A first component would consist of modelling the impact of natural hazards on CAPEX and OPEX, by linking hazard intensity, frequency and vulnerability to design adaptations, protective structures, maintenance regimes, monitoring requirements and insurance premiums.
A second component would assess how these additional costs propagate through project cash‑flows, debt‑service capacity and internal rate of return (IRR), thereby identifying the thresholds at which risks become non‑transferable to insurers or incompatible with long‑term project financing. Such a framework, building on emerging approaches in climate‑risk modelling, adaptation economics and infrastructure finance, would provide public authorities, lenders and private partners with a more operational basis for evaluating the financial viability and insurability of climate‑exposed megaprojects over multi‑decadal horizons.
7. Acknowledgements
I would like to express my sincere gratitude to all the professors of the Executive Master in Management of Major Construction Projects. Their commitment to sharing their knowledge, and indeed their passion, with future potential manager of major infrastructure companies reflects an exemplary level of dedication and professionalism.
My special thanks go to my mentors and to the programme coordinator, whose guidance has been invaluable from the initial definition of this thesis topic through to its completion.
Beyond the academic sphere, I wish to extend my appreciation to TELT for their availability, their openness in sharing information, and the organisation of the site visit, which greatly enriched this research. Finally, and most importantly, I am deeply grateful to my wife and my three children, who accepted, and at times endured, my many weekends of absence devoted to coursework and the writing of this thesis.