Risk managers considering climate change exposures are concerned about political and regulatory environments and confused about whose job it is to manage such perils, a survey has found.
The poll, released here last week by Switzerland-based commercial insurer Zurich Financial Services and environmental sustainability network Ceres, revealed how 200 risk managers view climate change and its potential impact on their industries.
The survey was administered jointly with the Professional Risk Managers International Association (PRMIA), and the findings, detailed in the report "Climate Change Risk Perception and Management: A Survey of Risk Managers," were announced at the 2010 Risk & Insurance Management Society Conference and Expo.
Ceres President Mindy Lubber said climate change is "sending ripples across business sectors," in terms of litigation, reputation risk and other issues.
"Risk managers at companies play a crucial role in helping businesses understand how their risk exposure may be changing," Ms. Lubber said.
According to the survey, risk managers are aware of climate risk, and 30 percent of those surveyed said climate change regulation was one of the top five risks facing their company. Respondents, asked to choose the five issues they were most concerned about from a list, selected the political and regulatory environment as the top concern. Climate change regulation ranked eighth based on percentages selecting the issue as a top-five concern. (See related text box, "Top Concerns.")
The survey also found that strategies regarding how best to mitigate climate risks are uneven.
When asked who in their company was assigned the "risks and opportunities associated with climate change," 25.9 percent said no one was assigned, 24.1 percent said senior management, 16.5 percent said the risk management division, and 16.5 percent were unsure.
"It's clear that risk managers are conscious of risks posed to 'business as usual' by climate change," said Lindene Patton, chief climate product officer for Zurich Financial Services. "Now it is time to convert that knowledge to risk management action."
She said Zurich is redoubling its efforts "to make certain risk managers understand the potential impacts to their businesses and working to offer solutions for mitigation of risks associated with climate change."
Ceres' Ms. Lubber suggested that risk managers can also help insurers create products and services that address those needs.
Sohayla Fitzpatrick, steering committee member of the Boston chapter of PRMIA, a global organization which counts 67,000 members in 198 countries, said the survey is a first step in helping risk managers, capital providers and insurers to better understand climate risk perception and what role internal risk management and external risk transfer can play in mitigating such risks.
She told NU that risk managers unsure of who in their organization is responsible for managing the risks will gain more clarity with stepped-up regulatory involvement. So far, she noted, regulations have been obscure.
The survey captured opinions of risk managers from: financial services, insurance services, high-emitting industries, health, medical, government agencies, agricultural and food/beverage. Nearly 60 percent of the survey respondents represented financial or insurance services or high-emitting industries.
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