Financial Risks of Climate Change: CFO's Should Pay Attention

National Hurricane Center, NOAA

At the Wall Street Journal’s CFO Network Annual Meeting, held on June 11, 2019, Zurich Insurance Group chief risk officer Alison Martin explained that CFO’s should take a leading role in analyzing their companies’ exposures to weather related risks.  According to a report published by CDP Worldwide, a U.K. environmental nonprofit, the world’s 500 largest companies face $1 trillion in potential financial risk from climate change.

CFO’s need to make climate risk assessments a bigger priority, and actively assess how environmental issues could affect their companies’ bottom line.  For more information, click here to read the Wall Street Journal article.

Additionally, climate change and its potential ramifications are now on the radar screen of financial institutions.  Although not a yet standard industry practice at this time, as of this publishing of this article, 26% of banks and financial firms say they have established dedicated teams for evaluating climate-related risks, and how these may affect their bottom-line. Financial institutions find they are under increased scrutiny from investors and regulators.   Click here to read the entire Wall Street Journal article.

Based on these articles, published within days of each other in the Wall Street Journal, it is evident that climate change as it relates to the financial health of an organization is becoming a hot-button issue.  More scrutiny as to the potential fall-out from these risks is sure to arise in the coming years – affecting organizational risk management, the financial bottom-line, how to evaluate these risks, and ultimately who in an organization will be tasked with the responsibility of where the buck stops.