Although the Coronavirus disease (COVID-19) pandemic dominates the world’s attention, climate risk is simmering in the background, with more than 3 in 4 (77%) CEOs and CFOs of the largest companies in the world admitting their firms are not fully prepared for the adverse financial impact of a changing climate. Moreover, 8 out of 10 (82%) believe their companies have somewhat to no control over such an impact on their business.
The findings stem from a global survey of several hundred CEOs and CFOs at companies with $1 billion or more in revenue across a wide variety of industries in North America, Europe and Asia Pacific. The research was commissioned by FM Global and conducted by ENGINE Insights.
Three-quarters of respondents (76%) said their organizations are somewhat to significantly exposed to climate risk. Floods, droughts and wildland fires topped the list as the three exposures that “concern their companies the most” and “could most negatively affect their financials.”
“The findings are concerning as hurricane and wildfire seasons begin in the U.S. and the threat of flood is on the rise globally, combined with the challenges the pandemic has placed on businesses – many of which are fighting to survive and recover,” said Katherine Klosowski, vice president, manager of natural hazards and structures, FM Global. “The combination of being underprepared for natural catastrophes, volatility in financial markets, and the threat of an economic recession couldn’t come at a worse time for many companies.”
“Fortunately, most losses stemming from climate-related events are preventable, and loss prevention can help preserve a company’s value and resilience, especially during the pandemic,” said Klosowski. “However, the challenge many companies will face is adequately preparing for such events if stay-at-home orders remain in place, which could exacerbate the impact climate-related events have on an already fragile bottom line.”