14 Sep 2023
by James Harvey

Mitigation focuses on reducing the impact of our actions on the environment, for example transitioning to a low carbon economy and organisations switching vehicle fleets from petrol or diesel to hybrid or electric. Adaptation is about reducing the impact the environment has on our communities and operations, for example by having flood response plans in place to protect people and increase organisational resilience.

Until recently much of the focus has been on mitigation through targets to reduce carbon emissions, with less focus on adaptation to climate change. Prevention is better than cure but the lack of action on adaptation means many organisations are under-prepared for acute and chronic climate hazards at a time when we are seeing an increase in the frequency and magnitude of these events.

Local authorities and all public service organisations have a leadership role and, as risk managers, you will be taking steps to become resilient. However, having a current view of your climate risks and resilience is vital and risk managers have the skills and tools to lead their organisations to resilience.

Risk managers are in a good position to lead their organisations on climate hazards.  

There are four key drivers for adaptation: physical risk, regulatory requirement, stakeholder expectation and insurability.

  1. The physical impact of climate risks such as flooding, storms and extreme heat can include property damage, business interruption, financial losses, and risk to safety. 
  2. There has been an increase in regulation alongside existing national legislation (Climate Change Act 2008). Both of which require organisations and government to implement and disclose their climate adaptations.
  3. Climate is a reputational risk too. Stakeholders are increasingly looking to the public sector to lead their communities by making sustainable commitments through environmental, social and governance practices.
  4. The proactive management of physical risks improves the insurability of an organisation against the identified risk.

By undertaking climate adaptation measures, an organisation can become more resilient to physical risks, achieve regulatory requirements, meet or exceed stakeholder expectations and improve their insurability.

Resilience starts with a climate risk assessment  

There are multiple climate hazards which can vary across the country. In the UK the 2023 National Risk Register identified the main climate hazards as flooding, heat and cold. We recently lived through the wettest March on record for 40 years, massively disruptive surface water flooding in London 2021, record breaking temperatures in excess of 40 degrees last year, and disruptive cold weather in December 2022 when the UK Health Security Agency (UKHSA) and Met Office issued a level three cold weather alert.

The foundation for adaptation lies in risk awareness and understanding, often provided by a thorough risk assessment. This comprises of hazard identification and prioritisation. What are the climate risks that your organisation is exposed to, and where are the highest risks geographically and organisationally?  

Prepare, respond, and recover

Once the hazards are identified and their impacts considered, suitable resilience and adaptation measures can then be prioritised appropriate to the hazard, location and operation of your organisation. The dynamic nature of climate hazards, geographical distribution and operational locations means there is no one size fits all for adaptation to climate change.

A suite of improvements from physical measures through to operational procedures are needed to achieve a holistic climate resilient organisation.

Climate resilience improvements can be thought of through three stages of a climate hazard, preparedness (before), response (during) and recovery (after). Preparedness actions include resilient design or creation of response and business continuity plans. Response measures include the deployment of flood protection measures. Recovery measures may include insurance arrangements, such as Zurich’s ‘Build Back Better’ scheme, and learning for the future.  

When considering adaptation for climate resilience, your insurer should be able to help or provide guidance. This ensures any changes you may be considering do not conflict with insurance policies and are considered appropriate.

Actions to improve climate resilience  

  • Begin internally: Review the hazards that your organisation has been affected by historically and consider what adaptation your organisation has undertaken thus far.
    • Do you have a current view of the future hazards and their impact?
    • Identify existing measures in place to manage these risks.
  • Work with your insurer: Consult with your insurer to determine if there is any advice or support they can offer and discuss how any adaptations you choose to make may impact your premium. A robust risk management plan can improve the insurability of an organisation and will evidence to underwriters the efforts being made to manage hazards.
  • Identify: Consider undertaking a climate risk assessment to understand your current and future risks and the communities or services most at risk and the potential adaptation measures to manage these risks.
  • Prioritise: Determine the most suitable adaptation measures for the identified hazard, location and operations.
  • Act: Implement the adaptation measures.
  • Communicate: Disclose the action undertaken and continually review and monitor the adaptations to ensure they are effective and maintained/updated when required.

At Zurich Municipal, we want to help you serve your communities as best as you can. We work with Zurich Resilience Solutions to help you develop good risk management procedures and systems, so you can identify and prioritise your risks, and take practical steps to manage them.

Zurich’s recent articles cover climate topics such as extreme heat events and wildfires, flood risk, as well as how Zurich are helping protect customers through, for example, the Build Back Better initiative and Flood Resilience Toolkit.

To find out more or discuss any issue raised in this article, please contact [email protected].

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