J466335—Resilience Campaign - Climate Change Post-Event Rep…


Addressing the practical agenda

During panel sessions, the discussion turned to the practical implications (both risks and opportunities) for businesses, directors and officers. Carlos Sanchez, Director Climate Resilience Finance fromWillis Towers Watson observed that “legal considerations will shift from being the enemy to being a friend” in conversations around evaluating, mitigating and pricing risk. A panel discussion among Richenda Connell, CTO and Co-Founder of specialist advisers Acclimatise Group, Miroslav Petkov, Head of Financial Services Environmental and Climate Risk at S&P Global Ratings and Professor Ben Caldecott of the University of Oxford’s Sustainable Finance Programme covered “indirect exposures” arising out of climate change that are hard to predict but that could pose liability risks to corporates. Chaired by Clyde & Co Partner from Sydney, Avryl Lattin, the panel addressed topics such as: what should business managers be doing, how to identify operational risks, and how to predict where exposures might come from. The session resulted in some suggestions for practical steps companies could take including: –– Make the best use of the latest scientific evidence and understand how that integrates with your business model. Sophisticated tools/models are available to develop bespoke projections –– Don’t overlook chronic risks (ie long-term, sustained changes) and the impact on capex/opex - extreme events should not be the only focus

–– Be transparent and give investors and other stakeholders the best possible information –– Consider your contracts. For example, supply chain resilience is likely to be tested more and more, putting contractual relationships under stress, and there is embedded liability yet to be tested in PPP contracts. Check terms to ensure that climate-related risks are taken into account –– Technology is set to open up liability issues – e.g. satellite data that is cataloguing multiple data points will enable claimants to go back in time and see what companies were doing, or DNA-decoding techniques will enable samples of soil/water to be used in future cases –– For insurers, understanding the impact of climate-related risk across businesses is vital. Putting the right exclusions in policies or defining new areas of cover is difficult until it’s better understood what the risks are. There are many opportunities for insurers to be involved in risk management conversations and risk transfer –– Investment in physical defences can create winners and losers – problems (and resulting liability exposures) simply be moved somewhere else –– Green credentials will come under increasing scrutiny. Misselling of financial products is one issue – reputational damage from perceived “greenwashing” is another. Regulators must get the methodology right

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