Recent extreme weather events have been harsh reminders that efforts to tackle climate change should not be limited to reducing greenhouse gas emissions as, despite mitigation efforts, climate risks are set to increase. Adaptation and risk reduction measures can help limit the impact.
Source: UNEP FI
The physical risks associated with climate change can be acute, e.g. floods, storms, droughts, heatwaves or wildfires; or they can be chronic, e.g. gradually rising sea levels or increasing temperatures. The impacts range from subsidence to wind damage to overpowering of AC systems to water damage, to name just a few.
How to assess and manage the physical climate risk to assets
It is important to consider not only events in the past, but also the future impact of climate change. We can make use of climate models to predict, over different time frames, the frequency and severity of events according to different IPCC scenarios, for example, 1.5, 2 and 3 degree temperature increases.
The first step in assessing physical risk is to use climate models to identify geographic areas of risk. The assets in scope must then be identified, taking into account the vulnerability which is specific to each asset characteristic. Lastly, any possible adaptation measures and insurance coverage must be taken into account to give a clear view of the net risk.
Source: BNP Paribas
Adaptation and mitigation: The two sides of climate action
Although too often contrasted, mitigation and adaptation are complementary and crucial for reducing our vulnerability to climate change.
Mitigation helps to reduce the risks, while adaptation is necessary to limit the damages. This table presents a simplified risk approach to underline the complementarity of mitigation and adaptation to climate change.
Adapted from the January 2024 edition of Perspectives, a collection of expert views on the green and social transition from NEST, BNP Paribas’ global Network of Experts in Sustainability Transitions.
