Covid-19-related business disruptions are getting all the headlines these days, but one study shows that climate-related business risks are simmering in the background at many large firms.
More than three-quarters of CEOs and CFOs (77%) say their companies are not fully prepared to meet the adverse financial effects caused by natural disasters, according to data from commercial property insurer FM Global, released Thursday. The company’s survey of more than 300 executives from around the world also found that more than 80% of executives “believe their companies have somewhat to no control over such an impact on their business.” The survey polled leaders at companies with revenues of more than $1 billion across a range of industries.
Three-quarters of respondents (76%) said their organizations are “somewhat to significantly exposed” to climate risk, citing floods, droughts, and wildland fires as the three exposures that “concern their companies the most” and “could most negatively affect their financials.”
The results add to an already volatile business climate and emphasize the need for loss-prevention planning, the researchers said.
“The combination of being underprepared for natural catastrophes, volatility in financial markets, and the threat of an economic recession couldn’t come at a worse time for many companies,” said Katherine Klosowski, vice president, manager of natural hazards and structures at FM Global. “Fortunately, most losses stemming from climate-related events are preventable, and loss prevention can help preserve a company’s value and resilience, especially during the pandemic.”
“However, the challenge many companies will face is adequately preparing for such events if stay-at-home orders remain in place, which could exacerbate the impact climate-related events have on an already fragile bottom line,” she added.
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