What is a Climate Change Risk Assessment?
Responding to changes in environmental regulations should be a proactive and ongoing process. Not only does it help you avoid financial and reputational costs, but more importantly it keeps you prepared for natural disasters and weather events. Linda Lacewell of the New York Department of Financial Services (NYDFS) summed up the importance of expecting the unexpected: “As the global public health pandemic of COVID-19 has made clear, preparation is key to addressing systemic risks. By the time a crisis occurs, it is simply too late.”
Just recently, the NYDFS sent out a letter asking organizations to start integrating the financial risks from climate change into their governance frameworks, risk management processes and business strategies. This warrants the need to conduct a risk assessment of the physical and transition risks of climate change. LogicManager’s Climate Change Risk Assessment solution package is designed to do just that.
There are significant financial penalties associated with noncompliance with environmental regulations. As a result of the Clean Air Act, Gulf Oil and George E. Warren paid penalties of $7.5 million for violating reporting requirements.
Failing to meet these requirements can also create a negative image for your brand; and a negative reputation is incredibly hard to recover from. Climate change is becoming a growing concern with each passing year, and today more than ever, consumers tend to choose vendors that align with their personal beliefs.
What you can’t measure, you can’t change. Performing a climate change risk assessment inherently helps you hold your business accountable, identify emerging risks and notice areas for improvement. Failure to examine your organization under this critical lens leads to failure to examine areas for improvement for your business, which ultimately hinders your success and can lead to serious risk events materializing.