Businesses increasingly have to prepare for the impacts of the changing climate.
What's happening?
While executives still look to economic downturns and talent shortages as top risks, the effects of the rapidly rising global temperature are becoming more pronounced, Insurance Business reported.
The World Economic Forum's Executive Opinion Survey measured the most pressing risks over the next two years for 11,000 business leaders from 121 countries. Inflation was No. 3 for respondents from G20 nations, followed by poverty and inequality, and extreme weather events linked to climate change.
"Equally concerning are the implications of new technologies, which, while offering tremendous potential for growth and innovation, present exposures that require careful management. Businesses need to shore up their defences against these new and emerging risks, to stay resilient and adaptable to future challenges," Marsh McLennan UK CEO Chris Lay said.
Why is this important?
Hotter temperatures are making extreme weather events more frequent and severe. This affects everything from people and wildlife to homeowners insurance rates and the prices of other goods and services.
Insurance Business pointed out that Brazil, Germany, Indonesia, and the United States are among the G20 nations that have experienced the consequences of extreme weather in the last year. While large corporations may be able to mitigate their risks and damages, small businesses often have to close up shop following natural disasters.
"[Zurich Insurance Group chief risk officer Peter] Giger also stressed the importance of broadening risk management strategies to include non-economic risks, such as climate impacts," the magazine stated. "By adopting a proactive approach, businesses can enhance their resilience while positioning themselves for sustainable growth."
What's being done about climate-driven risks to businesses?
Being prepared is the best way for business owners to deal with this issue. The risks are unpredictable, as Mityne Lewis — whose Chicago day care facility and home flooded earlier this year — found out. They provided tips about what to do, noting $1 in disaster preparation saves $13 in damages, cleanup, and economic costs.
In the big picture, the answer is to reduce pollution, most of which comes from the burning of dirty sources of energy. That means making small changes at home, changing shopping habits, and eating differently. Every little bit helps.
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