Most companies and governments are 'woefully unprepared' for the knock-on effects of climate change and are creating 'risk blindspots' according to a new report.
The new research report by Verisk Maplecroft is the first-of-its-kind study, which looks at risks that will be impacted by climate change – such as civil unrest, political instability, mass migration, economic fragility, resource security, worsening human rights and conflict. Such risks are to increase in prevalence as the severity of climate-related events intensifies.
Verisk Maplecroft’s head of climate risk and resilience Will Nichols said, “Organizations and governments have extensive risk mitigation plans for physical climate threats, yet the lack of investment in assessing secondary risks means most are woefully unprepared to deal with the political, economic and developmental impacts of a warming planet.”
He said, “It is not just governments that have a blind spot to these threats. The majority of businesses are not currently factoring the cascading climate impacts into scenario analysis and risk management approaches – that need to change if they are going to build resilience in the face of an uncertain future.”
The research concludes that most organizations and governments have plans in place to address physical threats and transition risks, but they are “yet to scratch the surface of the wider political, economic and social impacts of climate change, leaving populations, economies and investments highly exposed”.
The research, which assesses the susceptibility of 196 countries to these cascading risks, finds the world split into three near-even groups of ‘insulated’, ‘precarious’ and ‘vulnerable’ nations.
The insulated group predominantly includes the world’s wealthier countries, while the vulnerable group is generally characterized by those with lower incomes.
Africa and Asia’s developing economies, including India, Indonesia and South Africa, are in the vulnerable group that will bear the brunt of these secondary climate risks, finds Verisk Maplecroft.
But other geostrategic nations, such as Brazil, Mexico, Russia, Saudi Arabia and Vietnam, are in the precarious grouping and could experience significant instability from secondary climate risks, it adds.
Even China could find itself under pressure should its economic strength or tight grip over its society start to slip, the study says.