ABSTRACT
The Financial Stability Board (FSB) has identified climate change as a significant risk to the economy. The World Economic Forum (WEF) has consistently ranked climate change as the highest material risk to global business in both likelihood and impact. The global cost to business could be as high as $24 trillion by 2030 and $43 trillion by the end of the century. Properly diagnosing and responding to climate risk is becoming an essential component of broader enterprise risk management, which plays a vital role in securing competitive advantage. And yet, most companies are failing to properly understand and manage climate risk with devastating consequences for their operations, financial performance, and success in the marketplace. This chapter analyzes how climate impacts (physical risk) and changes in public policy and the market (transition risk) are reshaping the private sector; and how these impacts force a rethink of enterprise risk management at the company level.
