How to Manage Climate Risk

STEP 3 DEVELOP STRATEGIES TO REDUCE EXPOSURE

It gives you an edge. If you are actively managing these risks, you may be ahead of your competition. This gives you an edge in attracting tenants to your buildings, by demonstrating your understanding and

There are a range of ways to manage your risk. Systematic and regular reviews of your building or portfolio, ensuring budgeting provisions are current, and assessing risk early for new transactions are just a few. It’s easier than you think. It may sound complex, but it can be as simple as integrating climate-related risk decisions into the activities you already undertake every day. Undertake due diligence and planning when acquiring a new asset. Ensuring these steps are happening regularly and supported by established processes will simplify your risk management approach. It’s not always catastrophic. You will already be screening for other risks, like whether the building is structurally sound. Adding climate risk evaluation during that process will also tell you whether there are related physical and financial risk implications. Remember, climate risks aren’t always catastrophic. Rising heat impact may require an upgrade to HVAC or insulation, but it does not necessarily make an asset obsolete.

management of these issues. It allows you to plan sooner.

Understanding your risks early means you can plan sooner. A site requiring capital improvement over 5-10 years can be built into long-term capital budgets and may not require immediate and unplanned expenses. The key is to start early and manage this issue like any other risk. And there are upside opportunities too. And it’s not just risk avoidance and early planning that have long-term benefits; there are upside opportunities too. Being more disciplined in climate risk management can put you ahead of the competition, giving you an edge in attracting sustainability-conscious tenants.

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