Embracing Uncertainty: The Role of Scenarios
Directors can embrace uncertainty through scenario thinking, a core element of climate disclosure strategies outlined in TCFD requirements. Familiarising themselves with multiple scenarios enables directors to navigate the unpredictable nature of climate change with resilience.
Building the Evidence Base: An Iterative Approach
For businesses embarking on their climate risk journey, there is no one-size-fits-all formula to precisely gauge the financial impact of future risks.
An iterative approach involving risk screening, enterprise-level risk assessment, and the development of specific financial impact models is essential. Drawing from past and current hazards, such as floods and heatwaves, provides valuable data to build a robust evidence base over time.
Aligning with ISO31000: Recognising the Differences
While aligning climate risk assessments with ISO31000 is considered a leading practice, directors must recognise the subtle yet crucial distinctions. Adaptation measures, aimed at reducing climate risk vulnerability, take center stage in climate risk assessment.
Unlike traditional risk assessment, which considers only current conditions, climate risk assessment prompts directors to evaluate risk changes over multiple decades.
As we collectively address the challenges of climate change, informed and proactive governance will be the key to success. Read more about our climate change services here.