1 Minute Summary of
Coming to grips with corporate climate risk
WHY READ THIS
Understand how adaptation and resilience (A&R) plans can help companies protect themselves from corporate climate risk.
IN BRIEF
The risks of exposure to extreme weather events are becoming too significant for companies to ignore. Failing to prepare for and respond to climate change could cost organisations significantly and cause hardship for populations in exposed areas. Here’s how companies can protect their businesses and ensure regulatory requirements are met.
KEY FINDINGS
Turning trends into actionable information. A&R planners should consider the broadest possible scope of change in the global economy before assessing the costs and benefits of such changes on the organisation. This is best achieved through an initial diagnostic phase before developing potential solutions, which requires complex modelling using AI and advanced analytics. The diagnostic phase should involve risk analysis of key assets and value chains, identifying specific vulnerabilities. Solutions can then be developed to minimise these exposures before creating an A&R plan to implement these risk-reducing initiatives.
Using climate analytics and AI. Creating a detailed climate risk A&R strategy demands a comprehensive overview of multiple cause-and-effect scenarios that consider the possible impact on areas such as employees, processes, and assets. Establishing the value of resilience measures requires the use of advanced analytics and AI tools that interpret large data sets and deliver integrated outputs.
Implementing A&R plans. While climate risk is undeniably a global challenge, each company is uniquely impacted by it. This means that A&R efforts are also unique to each organisation. For example, highway operators in Europe were forced to consider the greatest threats to roads with the highest traffic frequency. In the private equity industry, managers need to evaluate the sectors and subsectors most at risk to climate-related factors and how they will manage such exposure.
THE BOTTOM LINE
With public awareness rising and regulatory requirements tightening on climate change risks, organisations need to accelerate the speed at which they conduct vulnerability assessments. Addressing climate risks has now become a strategic issue to both mitigate potential vulnerabilities and be prepared to capitalise on any opportunities that may arise.
