CEOs underprepared for climate risk, survey finds

Just 23% of global CEOs and CFOs said their company is prepared for the financial impacts of climate risk, according to a new survey by FM Global. A worrying 82% said their companies have only somewhat or no control over the impact of climate risks on their business.

The survey polled 300 CEOs and CFOs at large firms with more than $1bn of revenue. Some 86% of the survey said addressing climate risk is a medium to high priority and 80% agreed that executive management should be held accountable for any adverse impact of climate risk on financials.

Meanwhile, 69% of those with primary business in Europe said their firm is exposed to climate risk. Flooding is the top concern, with more than 30% of respondents saying it could impact their business’s bottom line more than any other climate risk.

Of the global respondents, 76% said they have exposure to climate risk, led by flooding, droughts and wildfires as the top three risks.

FM Global went on to warn that Europe should be braced for further floods this year. “The recent hot and dry weather that we’ve seen across Europe may exacerbate any flooding that does occur in the region. This could generate a monumental challenge for many businesses looking to deal with natural hazards like flooding alongside all the issues Covid-19 has already caused,” said Katherine Klosowski, vice-president, manager, natural hazards and structures at FM Global.

She said Covid-19 has added to the stress on companies and could create more challenges for preparations over natural catastrophes, urging companies to build resilience.

“The majority of climate-related losses are preventable, highlighting the importance of building business resilience, particularly during the pandemic,” said Ms Klosowski. “In the current crisis, achieving resilience may take more effort given the complexities caused by Covid-19, but it is possible. Lack of preparation could have a negative impact on already fragile bottom lines,” she added.