Failure to adequately access climate risk can lead to operational disruptions and financial losses. (Credit: metamorworks/Adobe Stock)
(Bloomberg) — Many businesses are overlooking the full extent of their climate risk, even after they’ve experienced the impacts of more extreme weather first-hand.
In a global poll of 130 risk managers conducted by Marsh, an insurance brokerage and risk advisory, fewer than half said their companies assess systemic climate risks that could impact critical infrastructure and supply chains. Rather, companies are focused more narrowly on risks to their direct holdings.
That echoes a report published this month by the World Business Council for Sustainable Development, which noted that companies often lack visibility on physical risks beyond their own assets.
That means organizations may be unable to respond to threats emanating from across their value chains as well wider social and infrastructural systems, said WBCSD, an association of 250 companies worldwide. That can lead to operational disruptions and financial losses.
Marsh also found that fewer than one-in-two survey respondents conduct detailed climate risk assessments, while more than one-in-five don’t evaluate future climate impacts at all. Some key hurdles include insufficient data and relying on catastrophe models that don’t factor in changing environmental patterns.
See also:
- Policyholders nervous about weather, insurance availability
- Drought damage starts at home
- The ghost of Hurricane Katrina haunts catastrophe modelers
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