[EBook] Climate Risk Management Practices for Businesses: Committing to Climate Change Preparedness
Climate change is here. It’s impacting business operations, company assets, and the global supply chain—and the frequency and severity of climate perils are only expected to worsen. That’s why organizations that want to ensure viability, gain a competitive advantage, and drive business value need to have effective climate risk management practices in place.
Some companies are just beginning on this journey, often as a result of mounting pressure from regulators and investors or as part of their ESG reporting initiatives. Other more advanced businesses have been embracing full climate resilience across the organization and are already seeing the benefits.
Across the spectrum of climate change risk management and readiness, companies typically fall into one of five maturity levels as defined by the The Climate Resilience Maturity Index. These consist of:
- Levels 1 & 2: Novice and intermediate companies getting started understanding climate change risk to businesses
- Level 3: Data-enabled, committed organizations with documented risk processes and climate risk committees in place
- Levels 4 & 5: Advanced and cutting-edge companies that are integrating climate data across the business, have an understanding of the ROI of climate risk analysis, and are incorporating climate risk into the broader company’s strategy
In a previous post, we explored the characteristics of Level 1 & 2 companies and how they can advance, and here we’ll define what sets committed organizations (Level 3) apart from these novice and intermediate companies. Plus, we’ll share the steps businesses can take to advance across the index and become more mature, climate resilient companies.
Adopting Climate Risk Management Practices: What it Takes to Become a Committed Organization
Novice and intermediate companies typically lack climate risk analytics specific to their business and usually are only able to meet basic reporting requirements for disclosure and regulation purposes. That starts to change with committed businesses. These organizations are climate-data aware, document their risk processes, and create climate risk committees. Typically, a chief sustainability officer or ESG lead, technical personnel (such as climate and data scientists), chief risk officer, and business unit leads are stakeholders. In addition, internal employees and upper management are often vocal advocates for change.
Likely, companies at this stage have calculated the ROI of climate risk analytics and resiliency initiatives, fueling their desire to achieve even more progress. Natural next steps include:
- Obtaining more granular climate risk analytics
- Conducting a deep-dive analysis of the company’s vulnerability to physical climate impacts
- Analyzing the impact of climate perils on the supply chain, financial performance, and other crucial assets
Utilizing Advanced and Cutting-Edge Climate Risk Management Practices
When committed companies are ready to take their efforts to the next level, they can start by conducting a more granular climate risk analysis. Importantly, key stakeholders must include critical C-suite members—from the COO and CFO to the CEO, as well as chief climate, sustainability, and risk officers.
The real mindset shift happens when businesses evolve beyond focusing on climate risk avoidance. Advanced and cutting-edge companies know that leaning into climate risk management practices can create value for the company. At this stage of the game, leaders are achieving gains by:
- Investing in internal climate science and climate risk management expertise or by partnering with third-party experts
- Using best-in-science climate risk analytics to identify regions and business lines that may become less or more viable for investment and adapting their strategies accordingly
- Conducting supply chain analysis to develop contingency and business continuity strategies
- Knowing not only what it takes to avoid risk, but also what it takes to derive ROI and value and profit from climate risk modeling
Evaluate Your Organization’s Climate Risk and Resilience Level
The window for becoming climate resilient is closing. Get your copy of the new eBook from Jupiter, The Climate Resilience Maturity Index, and find out what your company can do now to successfully implement climate risk management practices that make a difference and safeguard your critical physical assets, drive business value, and gain a leg up on the competition.