Will Richardson argues climate risk belongs in corporate risk registers, not sustainability reports. In 2021 alone, extreme weather caused $329 billion in global losses. He outlines a five-stage process to identify, assess, and monitor physical risks like floods and heat waves, plus transition risks from shifting to a low-carbon economy.
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Hey, thanks so much for listening. I would love to be able to help you more on what it is that you are listening to and why you're listening to, to me. If you could click on the link in the show notes, that would be awesome because it will help me define what it is that we should be talking about on this podcast. Climate risk isn't a sustainability problem. It's a business risk. Before we start, here's the one thing boards still get wrong about climate risk. They treat it as a sustainability issue. It isn't. Climate risk is a business risk. It sits alongside geopolitical exposure, cybersecurity, credit risk, and cost of capital. And if it's not actively monitored in your risk register, Your share price, your assets, and your reputation are more exposed than you think. We're going to change that today. What climate risk actually is. Now, let's be honest. When most executives hear climate risk, they reach for the next agenda item. It sounds like something for the sustainability team, a box to tick. A report to file, a framework to navigate. But climate risk is defined as the potential for climate change to create adverse consequences on your assets, investments, infrastructure, operations, and financial performance. It's not abstract, it's measurable, and the numbers are already striking. In 2021, Extreme weather events caused $329 billion in economic losses globally. That's about half as much again as the 21st century average. In the UK, heat waves are now 30 times more likely than in pre-industrial times. Catastrophic floods carry a 10% chance of occurring within the next 20 years, with damage in excess of £10 billion. Storms cost the UK around $1.6 billion between 2010 and 2019. By 2030 to 2039, that figure is projected to reach $3.8 billion. There are 2 categories at play. Physical risks: heat waves, flooding, storms, drought. The things you can see and feel. And transition risks: the financial and reputational exposure that comes from not moving fast enough towards a lower carbon economy. Both categories carry direct financial consequences. Both require active monitoring. The key question for any organization isn't whether these risks exist. It's whether you know your exposure to them. Benefit 1, protecting financial performance and share price. Here's the first risk monitoring matters, and it's the one that tends to get attention in the boardroom. Climate-related risks are likely to impact your organization's financial performance. How well or poorly you manage those risks will affect your share price and your access to funding. That's not a forecast from some distant future. It's already factored into how investors, lenders, and insurance underwriters assess organizations. 68% of companies surveyed are currently working on or planning TCFD-aligned disclosures. The ones doing it well aren't just ticking regulatory boxes; they're building genuine strategic clarity around exactly where their vulnerabilities lie. A well-maintained risk register tells investors you understand your exposure. It signals to lenders that you're not sitting on uninsured or stranded assets. It gives your board the information to make. Proactive decisions rather than reactive ones. And this is where monitoring becomes essential. Climate projections evolve, hazards shift. A risk assessment done once and shelved will miss the changes that matter most. Ongoing monitoring means your strategy stays calibrated, your disclosure stays accurate, and your risk picture reflects the world. as it actually is, not as it was 3 years ago when someone wrote the first report. Benefit 2, protecting reputation and staying ahead of regulation. The second benefit is about staying ahead, not just compliance. Companies that fail to identify and strategize around climate risk face reputational, transitional, and physical consequences. That's the position of the International Financial Reporting Standards from the ISSB. And it's already best practice to include evidence of managing climate change risk in your annual strategic reports. The regulatory environment will continue to evolve. Frameworks shift. TCFD, FRS S2, the UK's climate-related financial disclosure requirements. The specific reporting mechanism may change, but the underlying expectation doesn't. Companies that build their monitoring on a genuine understanding of actual risks, not just the reporting construct on top of them, will adopt to any new framework that arrives. During a recent internal session here at 51 to Carbon Zero, our head of climate risk put it plainly. This needs to be treated like all your other risks, whether it's geopolitical, whether it's cybersecurity, whether it's interest rate risk, credit risk, cost of capital. This is not a sustainability issue. That reframe from sustainability problem to business risk changes everything. It changes which team owns it, which meetings it appears in. And how seriously it gets treated. Benefit 3, monitoring enables adaptation. Adaptation protects value. The third benefit is less obvious, but perhaps the most important for long-term resilience. Risk monitoring isn't a one-off exercise. It's a 5-stage ongoing process: identify, assess, respond, report, and monitor. That final stage, monitoring, is where long-term value is protected. Why? Because climate risk is non-stationary. It changes as the Earth continues to warm. UK climate projections from the Met Office show that warming already locked in for the 2030s and 2040s means adaptation is essential under every scenario. Even the most optimistic one. Under RCP 8.5, the worst-case stress test pathway, UK summer temperatures in London could rise by 2.7 degrees by 2050. Sea level projections for UK coastal cities range from 27 centimetres to over 1 metre by 2100. For a business with coastal operations, supply chain partners in flood risk zones, or properties already becoming harder to insure. These aren't distant projections. They're active planning inputs. Monitoring is what keeps those inputs current. Reviewing your risk matrix as new projections come in, testing your mitigation strategies against updated scenarios, updating your register when the picture changes. This is what genuine resilience looks like. Not a single assessment filed away, but a living framework that evolves with the data. Climate risk monitoring is both an obligation and an opportunity. An obligation because the financial consequences of inaction are increasingly clear. An opportunity because organizations that understand their exposure can plan ahead. Protect their assets, and demonstrate to investors and partners that they are genuinely prepared. At 51 to Carbon Zero, we work with organizations across food and beverage and media, marketing, and advertising to build exactly this kind of framework— practical, data-led, and integrated into the way businesses already manage risk. If your climate risk is still sitting in a sustainability report rather than a risk register, it's time to change that. Start with identification, build your risk matrix, use probabilistic projections to understand your actual exposure, and build monitoring process that keeps your picture current. The data is available, the tools exist, the only thing missing is the decision to start. Get in touch with us at 51 to Carbon Zero. Let's build something that actually works.
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