The Risks of Climate Change (Part 2)

By: William Buist on : 29th January 2016: Business Design, Business Model, Business articles, Strategy: No Comments


I recently wrote about my involvement in analysing large losses in Insurance and how that work became aligned with Climate Change science, culminating in a CII Report (Coping with Climate Change) published in 2009. In that report, which I co-authored, the essential factor of sustainability was resilient and strategic business design. It’s been a slow journey to see the international agreement.


Following the COP21 talks in Paris, at which all the governments agreed to binding targets to reduce emissions, the principle author of the 2009 report, Dr Andrew Dlugolecki, published a review of the impact of that conference.

In that new report, there’s some encouraging trends and the universal agreement is as welcome as it is unexpected. However, there’s a reality check in the document that highlights:

Reality Check

  • The treaty does not come into effect until 2020. Too long.
  • It’s unlikely to stop a global temperature rise of at least 1.5 degrees by 2035. Too much.
  • Falling fossil fuel prices are rapidly making the commitment moot.
  • The question of whether some impacts of Climate Change will remain insurable at a reasonable cost has a significant bearing on businesses.

The impact on business

From a business point of view, this last point is probably the most important. While Insurers will seek higher premiums and restrict cover where risk shifts significantly, companies can prepare themselves to mitigate the risks by other means. That needs consideration of the way that climate change mechanisms can affect business, both directly, and also indirectly. There’s no doubt that the impact of COP21 will change policy in the UK, but possibly not for another year or two.

For companies that consider risk and opportunity as part of their strategic approach to doing business, it makes sense to start structuring your business model to minimise the impact we all have on the planet, to “tread lightly” as we do business, and to make the future a sustainable and enjoyable for everyone.

The new report (The Last Generation? The Paris Climate Change Conference and the Implications for Insurance) is available here… (pdf)

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>