The top five global risks identified in terms of likelihood in the World Economic Forum’s annual The Global Risks Report 2020 were all environmental or climate-related: 1. extreme weather events; 2. failure to adapt to climate change; 3. man-made environmental damage; 4. biodiversity and ecosystem loss; and 5. natural disasters. There is no doubt about it: The climate crisis is a risk multiplier, and as we continue to rely on fossil fuels, it is only going to get worse.
Climate risk concerns are top of mind for enterprises
Climate change is having an impact on business today, from sea level rise that threatens the value of coastal assets to exaggerated hurricanes, wildfires, and floods that inflict billions of dollars in damages on cities, businesses, and individuals. While business leaders commit to lofty climate goals to appease empowered stakeholders, bolster their reputation, and mitigate climate change, they are also realizing the reality: Acute and chronic physical impacts of climate change are a significant risk to their business operations, infrastructure, supply chain, and more. The Forrester Analytics Global Business Technographics Security Survey, 2019, shows that seven out of 10 global enterprise security decision-makers consider climate change and the potential impact it could have on their organization to be concerning, with about half feeling highly or extremely concerned. Across market verticals — financial services, manufacturing, utilities, services, healthcare, retail, and more — risk professionals are worried about climate risk.
New technology helps companies understand the impacts of climate change on their business
Software to help business leaders make informed decisions and adapt to climate change is emerging. These vendors offer advanced spatial, socioeconomic, financial, and climate data analysis to help organizations understand their unique exposure and vulnerabilities to a range of climate change hazards. They use predictive and probabilistic models based on a company’s assets and the latest climate data to help business leaders make reliable investments in climate change adaptation planning.
Historical weather data alone isn’t a reliable factor for modeling climate change. Instead, risk managers and business leaders need to be equipped with an understanding of climate impacts under several climate change scenarios. As traditional approaches to catastrophe modeling become less useful for strategic planning, climate risk analytics solutions are fueling the next evolution of disaster risk reduction and climate change risk management. These solutions offer features such as UI/UX, visualization, data quality and advanced analysis, a variety of hazard types and climate scenarios, and more. If you’re interested to learn more, Forrester has done some research evaluating some of the top vendors in the climate risk analysis market in a new report, “The Forrester New Wave: Climate Risk Analytics, Q3 2020“.
This post was written by Principal Analyst Renee Murphy, and it originally appeared here.