How to Manage Climate Risk

STEP 4 TRACK AND REFRESH

Refresh or re-evaluate. Once you reach this step, you have the data, a detailed understanding of climate risk, and processes backed by the operational and real estate teams required to take action. From here, the process repeats, but while you don’t always need an end-to-end re-evaluation, some triggers should prompt a refresh. For example, portfolios can change with assets coming in and out, which can shift your risk exposure. If that’s happening more regularly, accounting for new physical and financial risks at a building and portfolio level may be warranted. Another is if you’ve identified a high-risk site that needs more frequent monitoring and intervention. Similarly, a climate event such as flooding may trigger changes in insurance costs even if the flood doesn’t directly impact your location. Establish thresholds and triggers to prompt refreshing your process based on what’s happening across your business. Know that it’s a continuous journey. Put simply, evaluating and managing climate risk is not a process that ends. In fact, the clearer the picture at any given moment, the more effective financial planning, asset resilience and strengthening strategies will be.

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