Manage Climate Risk Without A Sustainability Team
Reductions, there has
been a rise in climate-related disasters during the past 20 years. That said (and
the global pandemic aside), the events of 2020 alone should leave no one in any
confusion over the reality of climate-related risks:
January 2020: Flash Floods in Indonesia kills 66
January – March 2020: Australian bushfires kill roughly 478
May 2020: Cyclone Amphan kills 85 people in Bangladesh
August 2020: Hurricane Laura kills 77 in Louisiana and Texas, theDominican Republic and Haiti
August 2020: Flash floods kill 150 in Afghanistan
November 2020: Hurricane Eta kills 150 in Central America
December 2020: 2020 was joint hottest year for the planet with 2016
report, Climate risk: Is the financial services industry prepared?,
we explore the very real impacts that climate-related risks could have on
businesses and risk teams, including:
Market risk: Natural disasters and/or climate policy changes leading to the
re-pricing of various financial instruments, including equities.
Credit risk: Potential increases in defaults by businesses and households due to
extreme weather events. Climate events causing collateral depreciation.
Liquidity risk: Climate-related risks adversely affecting refinancing opportunities. Greater
liquidity needed to cope with climate risks.
Operational risk: Supply chain disruptions and facility closures as a result of
physical risks. Broader business resilience problems and the associated effect
on brand reputation.
and leaders are becoming increasingly aware that climate-related risk needs to
be managed effectively to secure the future of their organisations and
according to Harvard Business Review, environmental,
social and governance issues (ESG), were at the top of senior executives’ priorities at over 43 global institutional investing firms, including the
world’s three biggest asset managers (BlackRock, Vanguard, and State Street). Giant
asset owners such as the California Public Employees’ Retirement System
(CalPERS), and the government pension funds of Japan, Sweden, and the
Netherlands were also concerned. What’s more, those organisations who have not adopted
adequate climate risk policies are facing pressure from other levels
on the corporate ladder, as over a third (35%) of UK businesses claim staff have left roles
because they are dissatisfied with their employer’s stance on climate-related
Who has a
fully-formed climate change risk assessment framework in place?
change risk assessment framework is a formal structure that is aligned with
governance standards that identifies and evaluates potential climate-related
risks and the impact they could have on the organisation. They are typically
enacted by a climate risk team, ideally lead by a Chief Sustainability Officer
Big 4 consultancies, the larger UK banks and financial services firms, research
shows that most organisations do not yet have a dedicated climate risk team or
CSO, instead preferring to deploy specialist staff within existing credit,
market, operational and liquidity risk functions.
often a strategic choice, with companies recognising that climate risk affects
all areas of risk management. Some firms are also too small to warrant separate
climate risk teams, in which case the climate risk responsibility typically
falls upon the CEO or MD.
implement climate risk management without a risk team
pressures mean that companies don’t have long to fully embed their climate risk
frameworks before the end of this year. Many also recognise that climate change
preparedness extends beyond their immediate regulatory obligations, however
without a dedicated risk team in place the challenge lies in being able to
properly implement changes to risk management without overloading the CEO or
option for many organisations is to explore the expertise that interim managers
bring. Contractors and other interim specialists can provide essential support whilst
organisations build towards recruiting a climate risk management team, helping businesses
deliver the necessary changes to achieve regulatory compliance and climate risk
Building your permanent or agile climate risk management
Barclay Simpson is an international recruitment consultancy
that specialises in recruiting professionals for the interrelated disciplines
of Governance, namely Information/IT Security, Risk, Resilience, Audit,
Compliance, Legal and Treasury. Our risk team mirrors our clients’ needs by
dividing our expertise by discipline; Investment Risk, Operational Risk,
Liquidity Risk, Quant Risk and Credit Analytics.
When you’re looking to build and secure your organisation’s
climate risk management capability, Barclay Simpson can help you quickly build
a technically proficient multi-skilled risk management function and team either
on a permanent or contract basis.