Climate risk is the potential for climate change to harm a business, divided into physical risks from extreme weather and long-term shifts, and transition risks from policy, technology and market changes.
Climate risk is the potential for negative consequences to an organization from climate change. Frameworks such as the TCFD and IFRS S2 split it into two types.
Physical risks directly affect worker safety. Hotter summers increase heat stress, wildfires bring smoke exposure, and storms and floods can trap lone workers or damage access roads.
An agricultural services company added climate risk to its risk register. It identified more frequent extreme heat days as a physical risk and introduced work-rest schedules based on WBGT. It identified rising diesel costs and carbon pricing as transition risks and began trialing electric utility vehicles.
Boards oversee it, but risk, finance, sustainability, operations and EHS teams all contribute.
Through risk assessments and scenario analysis that test the business against different warming and policy pathways.
It is required in some jurisdictions and expected by many investors. Requirements vary and are changing.
Part of SafetyIQ's EHS glossary: plain-English definitions of workplace health and safety terms.
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