Mr Lorenz, sustainability is often associated with environmental measures. In your view, why is risk management also an integral part of it?

Pascal Lorenz: That’s a valid question. When we talk about sustainability, many people immediately think of cutting down on plastic or reducing their carbon footprint. That’s absolutely essential, but it’s only part of the equation.

To me, true sustainability means being prepared for the future. A hotel that invests heavily in solar panels today is acting in an environmentally sustainable way. But what happens if an extreme weather event destroys the system or a technical fault brings operations to a standstill for weeks? If there is no financial safety net in place, the ‘sustainability’ project comes to an abrupt end.

You have to look at it this way:

Environmental measures protect our planet.
Risk management safeguards our livelihoods, ensuring that we can continue to provide this protection in the long term. This is where a specific prevention check often comes into play, bridging the gap between these two areas: Those who have their technical systems serviced regularly and professionally not only drastically reduce the risk of fire or breakdowns (risk management), but also generally optimise energy consumption straight away (environmental protection). So, those who understand their risks and take preventative action automatically conserve valuable resources.

In professional circles, we often refer to the ESG criteria (Environment, Social, Governance). Risk management has a direct impact on governance, that is, responsible corporate management.

A sustainable hotel without sound risk management is like a solar-powered sailing ship without lifeboats: it may operate cleanly, but it will be unable to manoeuvre when the first severe storm hits.

By managing risks, we ensure that hoteliers’ green investments are not devalued by unforeseen events. Only an economically stable company has the strength to fulfil its environmental and social responsibilities in the long term. Sustainability and security are two sides of the same coin.

What risks do many hotel businesses still underestimate, particularly in the context of sustainable and forward-looking management?

Pascal Lorenz: That is a crucial point. Many hoteliers have the traditional risks, such as fire or tap water, well under control. However, as part of the transition to sustainable operations, new blind spots are emerging. I see three areas in particular that are often underestimated:

1. The ‘green’ supply chain and dependencies

Sustainability means relying on partners who share the same values. However, if a specialist, sustainable supplier fails to deliver – whether it be regional organic produce or eco-friendly building materials – they cannot simply be replaced overnight. This disruption to the supply chain can seriously disrupt operations. Anyone without a contingency plan risks their credibility and turnover.

2. Cyber risks posed by smart building technologies

A modern, sustainable business often relies on intelligent control systems: smart heating systems, connected lighting and digital check-ins save huge amounts of energy and resources. However, every connected device is a potential entry point for hackers. A cyber-attack that paralyses a building’s control systems is often more devastating for a hotel today than minor damage to property. Digitalisation and sustainability go hand in hand – but IT security must keep pace.

3. Climate-related risks and the risk of ‘greenwashing’

We are seeing an increase in extreme weather events. Many people underestimate the fact that places which were still considered safe ten years ago are now at risk from heavy rainfall or heatwaves. In addition, there is an often-overlooked liability risk: if a hotel promotes itself as sustainable but is unable to deliver on its promises due to operational failings, it faces legal consequences and massive reputational damage. Transparency is the best form of risk management in this context.

My conclusion for practical application: Being forward-looking means looking beyond the confines of property and casualty insurance. It is no longer just about what happens in the event of a fire, but what happens when technology fails or climate change puts pressure on the business model.

Digital threats, technical faults and natural disasters are on the rise. What role do modern insurance schemes play in providing cover against these new challenges?

Pascal Lorenz: Today, modern insurance companies are far more than mere ‘claims payers’ – they act as a strategic safety net and an active partner. In an increasingly complex world, they fulfil three key roles:

• Prevention rather than simply reaction: Modern insurance policies often include support services such as cyber crisis management or weather warning systems, which help to prevent damage before it occurs.
• Comprehensive cover: Modular solutions are used instead of rigid, stand-alone policies. They cover not only physical faults in a photovoltaic system, but also the loss of yield when the sun is shining but the system fails.
• Financial resilience: You ensure the liquidity required for a sustainable transformation. Should an extreme weather event occur, the right strategy ensures that operations can not only be restored, but also refurbished immediately in line with the latest sustainability standards.

In short: Modern insurance schemes provide a safety net that enables hoteliers to invest boldly in the future and in green technologies without putting their livelihoods at risk at the slightest disruption.

What advice would you give to hoteliers who want to make their businesses not only more sustainable but also more resilient to crises?

Pascal Lorenz: My advice can be summarised in three steps:

• Think holistically: view sustainability and security as a single entity. An environmental investment is only truly sustainable if it is also protected against failure.
• Regular risk audits: The world is changing rapidly. Once a year, review your business with experts – not simply to take stock of your insurance policies, but to identify new sources of risk, such as cyber vulnerabilities or climate risks, at an early stage.
• Investing in prevention: The best kind of damage is the kind that never happens in the first place. Whether it’s state-of-the-art fire detection systems or staff training for crisis situations – prevention not only saves money in the long term, but also protects the environment by avoiding repairs and the waste of resources.

My main point: Don’t wait for a crisis to strike before thinking about resilience. A resilient hotel is an attractive hotel – for guests, staff and investors alike.

What practical examples are there of situations where a sound risk management strategy has proved its worth in the long term?

Pascal Lorenz: A very clear example is a medium-sized hotel that has consistently relied on generating its own electricity using a large-scale photovoltaic system and a modern heat pump.

A severe hailstorm not only damaged the plant but also caused consequential damage to the control electronics. Thanks to a modern, sustainable protection concept, three things happened:

• Loss of income cover: The insurance policy covered not only the repair costs, but also the additional costs incurred as a result of the high price of electricity purchased from the grid whilst the system was out of operation. The company’s cash flow remained unaffected.
• Technology update: Rather than simply restoring the system to its previous condition, the contract provided for the installation of the latest, even more efficient generation of modules.
• Networked support: A network of specialist tradespeople, as set out in the plan, ensured that the repair was given priority.

The result: The hotel was back up and running and fully operational in no time at all. Without this well-thought-out plan, the financial loss incurred through energy costs would have forced the hotelier to postpone other planned sustainability projects – such as switching the fleet to electric vehicles – by several years. As a result, what could have been a setback turned into a leap forward.