It is the first time the IRM has published a guidance report focused solely on climate change for risk managers
Risk managers, through collaboration with a range of stakeholders, will need to play an increasing role in supporting organisations in identifying, assessing and managing their climate-related risks and opportunities and integrating them within existing Enterprise Risk Management (ERM) frameworks.
This is according to the IRM, which has developed a new framework and guidance document which will help organisations build their capabilities and help to make sense of the complex climate changes forcing and driving transformational change across economies, industries, and society at large.
Martin Massey, chair of the IRM’s Climate Change SIG and contributing author explains: “We have identified seven key areas that require attention to enable the development and execution of a climate change risk management strategy in any organisation. Each area of focus has been used as a key section within the guide.
”We start by identifying the key risks and opportunities being driven or otherwise associated with climate change risk landscape covering physical, transition and liability risks and the development of a risk taxonomy and a ‘risk radar’, further sections will be published in due course.”
Elevation of ESG
While the guide focuses on climate change it is important to understand the relationship and relevance to the wider ESG issues that are set to become increasingly prominent features of financial regulation and supervision globally.
ESG factors are rapidly becoming the single most important business driver of the decade, organisations around the globe need to act quickly to get reporting processes in place so they can measure progress.
It is crucial that companies and governments’ progress towards halving greenhouse gas emissions by 2030 and reaching net-zero by 2050 are measured accurately.
Carol Misiko, senior IRM member (and an advisory board member for the World Economic Forum Global Risk Report), added: “In recent years, the World Economic Forum’s top risks have been dominated by environmental risks. In their survey for the 2020 report, climate change counted for three of the top five global risks: Extreme weather events, failure of climate-change mitigation and adaptation and biodiversity loss and ecosystem collapse.”
”Organisations must address a growing number of critical drivers of change and expectations, including new international and national legislation and regulation and the voluntary disclosure approach led by the Task Force for Climate-Related Disclosures (TCFD).”
“Other major drivers include increasing public concerns and pressure from lobby groups, activists, regulators and investors, this report is a great resource for risk managers and couldn’t be timelier”.