7 Reasons to Consider a Climate Change Assessment

Climate change is taking an increasing toll on businesses and facilities. From Hurricane Ian in 2022 to Hurricane Idalia in 2023, natural disasters are becoming more frequent and intense. They are wreaking havoc in poor and rich countries alike, leaving businesses and their insurance companies to create prevention strategies.

Global Risk Consultants recently began offering Climate Change Assessments which analyze your risks of storms, sea level rise, drought, floods, and other climate change perils in 2030, 2040, 2050, and 2100. Why consider a Climate Change Assessment now? Here are seven reasons:

1. Climate risks are expensive. Global economic losses from natural disasters continue to climb – and many experts attribute the increase to climate change. In fact, Munich Re reports that overall losses from natural disasters in 2022 were $270 billion. Insured losses represented $120 billion. Swiss Re found similar results of $275 billion overall with 45% of that damage being insured. That was the fourth highest total for a single year.

Hurricane Ian led the way with roughly $100 billion in total losses and $60 billion which was insured – making it the costliest event of 2022. As extreme weather events become more frequent and intense, we expect uninsured and insured losses to continue rising.

2. Anticipate future financial risks. Climate-related perils may not be impacting your business today but could be devastating in the future. What would a risk model say about the financial impact of river flood, extratropical storms, tropical cyclone, and storm surge? Find out with a Climate Change Assessment which analyzes the impact of these perils to your organization’s property now and in the future.

3. Improved risk strategy. It’s critical to understand the risks you’re going to be facing in the future. Climate Change Assessment reports empower company leaders to learn which perils will be most devastating to your facility so you can act accordingly. If tropical storm is at the top of your list, you’ll likely make plans to fix rooftops and secure your building envelop to protect against these increased exposures. If drought is an emerging issue, you may need to tap into secondary water sources or move a plant entirely. No matter the situation, knowledge is power.

4. Increased regulations. The European Green Deal sets the EU on a path to carbon neutrality by 2050 with important regulations that European organizations and companies doing significant business in Europe must follow. The Corporate Sustainability Reporting Directive requires a broader set of companies to report on sustainability and ensures that investors and other stakeholders have adequate information to assess investment risks from climate change and sustainability issues.

5. Finance improvements. Climate Change Assessments give companies the information necessary to finance important upgrades that will protect their property in the future. With bankability a major concern, the EU has set aside €1 billion for businesses for climate-related changes. To access those funds, organizations must deliver reports that comply with Appendix A of the EU Taxonomy requirements – and Climate Change Assessments from Global Risk Consultants offer the appropriate information that banks require to make loans for necessary improvements.

6. Consumer expectations. If you don’t showcase plans to become more sustainable and act on climate change, you may lose market share to competitors. Many consumers are voting with their wallets and aren’t shy about using social media to vent their frustration with companies that aren’t taking strides to become more sustainable.

7. Ensure insurability. Organizations must demonstrate a proactive push on climate change risks as insurance capacity continues to reduce. In fact, traditional capacity in 2022 reduced by 20-25% vs. 2021. Showing underwriters that you have a strong strategy to future-proof against climate-related risks could help your business gain more favorable coverage, terms, and conditions.

If you are interested in a demo of a Climate Change Assessment, contact us today.