The Covid crisis has overshadowed the risks most businesses believed they faced only 18 months ago. Risks from cyber-attacks and disruptive competitors are still there, but we are now more aware than before of threats presented by broader more general global disturbances—and there is no greater such treat than climate change.
A recent report from the UK’s Institute of Risk Management (IRM) suggests that businesses need to pay immediate attention to how they prepare for and manage climate change risk in six key areas:
Political. Action, taken (or not taken) by countries to align their economies with the recommendations of COP26, the UN climate conference in November 2021, will influence risks to business—directly as it reduces the physical effects of climate change, or indirectly through increased regulation.
Electricity. As coal and gas become unacceptable in many countries, power generation must rely on renewable sources and nuclear. As yet, these sources are nowhere near adequate to meet existing demand. Yet we are entering a time when demand for electricity will rise dramatically due to the use of electric cars, and greater digital connectivity with the coming of Blockchain and Internet of Things.
Insurance. The recent Supreme Court judgment in the UK Financial Conduct Authority’s business interruption insurance test case brought relief for thousands of companies, distressed due to the Covid crisis. Roadblocks to compensation have been removed, but this will now bring a review of business interruption coverage, costs, and post-event response (for flooding especially).
Travel. The Covid pandemic has brought major disruption to aviation and rail travel. How these industries will recover, whether pent up demand will bring a return to previous levels, or whether the home working habit and the popularity of Zoom, etc., will greatly reduce commuting and business travel are unknowns likely to affect the pricing and availability of transport.
Mining. Many economies, still dependant coal extraction, will be under increased pressure. At the same time the metals needed for batteries and mobile phones and devices are in short supply. As well as stirring up trouble from environmental protest groups concerns around mining will cause geo-political tension.
Flood. In the UK floods, but elsewhere forest fires too, are inevitable consequences of the changing climate. The need for greater physical protection against flood and fire damage will increase.
Join Imperial College London’s Climate Change Risk Management program
Date: April 22-23, 2021 │ Format: Online via Zoom
Beyond the six areas highlighted by the IRM, other areas of concern and potential risk are emerging. For example, environmental scientists, who say that after fossil fuels cattle are the greatest producers of carbon dioxide, are calling for a major change in our diet—less meat more veg. This would not only effect land use but greatly disrupt rural economies and supply chains.
On the upside, along with the risks, the need for investment and innovation to build a greener economy will create tremendous new opportunities for business. And business will necessarily be at the forefront in meeting the challenges of climate change. Even so, organizations of all types and sizes will be impacted in some way, by both the physical effects of the changing climate, and the plethora of regulations and targets they will be increasingly required to meet. Business leaders need to understand the risks involved.
As expressed by Professor Martin Siegert, Co-Director of the Grantham Institute and Professor of Geosciences at Imperial College London: “Since humans started burning fossil fuels at an industrial scale, and increasing the concentrations of greenhouse gases, the world has changed. Whether we can keep global warming to 1.5C above pre-industrial levels, or let it go much higher, depends on our ability to take firm action on carbon dioxide emissions over the coming decades. Either way, the world in 2050 will be very different to today; decarbonised and clean, or well on its way to dangerous levels of warming. Business leaders and decision makers who have the ability to build and enact policies that will resonate in the coming decades must understand the environmental risks we are facing.”
Help is at hand from The Institute of Risk Management, Imperial College London, and the Grantham Institute, who have teamed up to deliver practical training program for those responsible for leading on risk management in their organizations and other executives who need to know more.
The Climate Change Risk Management program will be delivered virtually, over two days, with three hours of live sessions per day (via Zoom). The presenters are experts in the field of climate change and risk management and include:
- Prof. Martin Siegert, Co-Director of the Grantham Institute and Professor of Geosciences at Imperial College London
- Dr Mark Workman, Visiting Lecturer at Energy Futures Lab; an Affiliate Researcher at the Grantham Institute for Climate Change; and the Environment and Research Fellow at the Centre for Environmental Policy, Imperial College London
- Dr Enrico Biffis, Associate Professor of Actuarial Finance at Imperial College Business School and Associate Director for Development Finance at the Brevan Howard Centre for Financial Analysis
- Martin Massey, Chair IRM's Climate Change Special Interest Group, Managing Director, OneRisk Consulting Ltd and Satarla Associate
- Dr Sarah Gordon IRMCert, IRM accredited trainer and course designer, Co-Chair IRM Innovation SIG, and CEO, Satarla Risk Management
Building on world-leading expertise in the science of climate change, business management and enterprise risk management, this practical course not only allows learners to explore why managing climate change risk is important to their organisation but also how to do it.