Report: Why You Should Build Your Climate Risk Strategy Now

by | Feb 2, 2018

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After a year of severe weather disasters, most businesses have stopped mulling whether to worry about managing climate risks and are now mulling the best way to do it. In fact, companies that incorporate climate risk analysis into their wider management strategies will meet the needs of both investors and regulators, and will set companies apart, according to a new report from Verisk Maplecroft.

“Business costs from extreme weather are already stacking up. The US experienced $16 billion events this past year, each one representing a litany of damaged premises and lost sales, as well as the human cost,” Verisk Maplecroft’s senior analyst Will Nichols told Environmental Leader. “Extreme weather events will become more frequent and more powerful, with a concomitant rise in the damage they cause.”

 

Costs Will Rise for Unprepared Businesses

The amount that rich countries have pledged to the Green Climate Fund so far is negligible in terms of covering increasing climate change damage. “Without international funds to rely on, jurisdictions are likely to seek compensation elsewhere,” Nichols says. “The New York City case brought against polluters is likely to be the tip of a rapidly melting iceberg.”

Insurance claims for climate-related damage are rising, and costs are likely to rise, as well, according to the Environmental Risk Outlook 2018 report. “Businesses face the prospect of fighting court cases with highly unpredictable outcomes. And, if the courts decide they should pay compensation, the nature of climate change exacerbating extreme weather makes it likely costs will shoot up,” says Nichols.

Companies need to consider not just their impact on climate change, but also how climate change will impact their operations and profitability. Distilling the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations into corporate policy is a good start, he says.


Environmental Leader recently published two articles about environmental insurance coverage claims by an environmental law expert from Lowenstein Sandler:

Winning Environmental Insurance Claim Trials: Was It ‘Accident’ or ‘Occurrence?’

How to Survive a Late Notice Challenge in an Environmental Insurance Coverage Action

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