System-level
Asset-level
Governments & Regulators
How could future policy, legal, or social factors present risks or opportunities to my business?
As climate change impacts worsen, governments and regulators may impose increasingly onerous requirements on businesses to report and reverse the impacts of climate change. Complying properly with these requirements can help your business demonstrate your commitments to key stakeholders and establish you as a preferred business to engage with.
Marsh can work with you to understand which factors are important for your business, ranging from changing disclosure requirements (adaptation is increasingly in focus, and physical risks are already part of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations) to new policies (planning restrictions, legal liabilities), ensuring appropriate measures are taken so that you and your business are prepared.
How can Marsh help?
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How could capital providers (including insurers) be impacted by climate change, and what does that mean for me?
Your capital providers (including insurers) are not immune to physical risks. The impact of climate change on their own businesses, and their regulatory and reporting requirements, may have knock-on impacts on your business.
Capital providers
Marsh can help ensure you are best positioned to meet capital provider expectations. For example, we can mobilize your organization’s financial capital for flood resilience by standardizing co-benefit assessments and integrating them into environmental, social, and governance (ESG) and green finance frameworks. This also can be incentivized by strengthening the role of resilience ratings in awarding public and private contracts.
How can Marsh help?
How could the local communities I interact with be impacted by climate change?
The communities your business operates within (and that your employees are part of) may be significantly impacted by climate change events. It is important to understand how your business could be affected and to play an active role in adaptation for the broader community.
Communities
Marsh’s adaptation and resilience recommendations keep communities in mind at every stage. One example is community-based catastrophe insurance (CBCI), which demonstrates how new flood insurance solutions can be designed to create risk-reduction incentives at community level.
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How can water, nature, and other ecosystem services that my business depends on be impacted by climate change?
The resources and ecosystem services that your business depends on and derives value from can be critically impacted by climate events. Heatwaves and droughts can create severe water shortages that impede business operations, for example, and the availability of agricultural inputs can be affected. Businesses need to understand their dependencies and impacts on the natural environment so that adaptation solutions consider these elements.
Resources & ecosystem services
Marsh works directly with businesses to implement robust enterprise risk management strategies, including pollution prevention and avoidance, for example, to protect their balance sheets from activities that harm nature.
Marsh can identify potential impacts of climate change on your business strategy, such as resource availability or whether the provenance of key materials will be viable in the future (for example, will you be able to claim that something is made with 100% Italian ingredients?).
How can Marsh help?
How could infrastructure (roads, waterways, energy utilities) that my business depends on be impacted by climate change?
The infrastructure that your business relies upon can be easily impacted by climate change events, especially given that damage to a single bridge, highway, railway, or port can bring the entire chain of connectivity to a halt.
Critical infrastructure
Marsh can work with you to understand key points of dependency and their potential disruptions from climate change in order to develop contingency plans.
How can Marsh help?
How are my customers impacted by climate change?
Just as your upstream suppliers can be disrupted by climate change, so too can your downstream customers, affecting their purchasing habits.
Customers
Disruptive physical impacts can lead to shifts in demand from customers. Sectors that often bear the brunt of this include oil and gas, real estate, retail, automotive and transport, power generation, and agriculture.
Did you know?
How could my suppliers be impacted by climate (and other risks)?
Supply chains are vulnerable to climate change. The ripple effects of disruptions in higher tiers of your supply chain can directly impact your ability to operate. To understand your supply chain’s climate risk exposures, you need to build an accurate picture of your supply chain, how products flow, the potential bottlenecks, and the consequences to your business if critical components are disrupted by climate risk events.
Suppliers
Supply chains have been growing in complexity, and companies are increasingly exposed to climate risk beyond their borders. 76% of all trade occurs through global supply chains (source: Marsh McLennan)
82% of businesses do not have full visibility into their supply chain and logistics operations (source: American Productivity & Quality Center (APQC), estimate by Marsh McLennan).
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How can I protect my assets from climate-related physical damage?
To protect your physical assets, you need to identify the various climate risks you are exposed to and the financial impacts that could result. We can then work with you to explore a range of resilience measures, their costs and benefits, and a roadmap to implement them at exposed asset sites.
Physical assets
Approximately 18% of the global population is currently threatened by flooding, and even limiting global warming to 2°C would cause this percentage to double (source: Marsh McLennan Flood Risk Index).
There has been an 181% increase in the global number of flood events between 2010-19 compared to the years 1980-89 (source: Marsh McLennan).
Did you know?
How should I prepare for a natural catastrophe event? How can I ensure business continuity?
Emergency Response
Firefighters lacked water to put out the wildfires that ravaged Maui last year due to extreme environmental conditions and a system collapse. Authorities were forced to resort to people evacuations, leaving whole communities destroyed. (source: The New York Times)
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Emergency Response
Physical assets
Operations & People
Suppliers
Customers
Critical infrastructure
Resources & ecosystem services
Communities
Capital providers
Governments & Regulators
Prudent businesses have plans in place for how to respond to a range of emergencies. However, will those plans still work in a changed climate? For example, will you still have water available to tackle a fire during a drought, and could emergency services reach you in a flood?
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Marsh works with multiple climate risk models to fit your specific requirements and leverages the latest approaches to climate risk modelling, coupled with on-the-ground engineering surveys, to help you identify and implement appropriate resilience measures. Insurance and adaptation and resilience measures go hand in hand – both can protect your business against physical damage and unlock new business opportunities.
How can Marsh help?
To better manage your operations and people, you need to understand how chronic and acute physical risk events affect your processes and your workforce. We can then look to a range of financial, strategic, and planning measures to reduce the impact of these on your business. For example, inspection regimes may need to change in different climates and your people may need to change the way they work.
How can I manage my operations (employees, processes) in relation to the changing climate?
Operations & People
Our global risk engineering teams, together with Mercer, a Marsh McLennan business are leading specialists in people and health risk.
We can arrange insurance solutions to compensate your employees in the event they are impacted by extreme weather, or to compensate your business for interruption in operations. Our Advisory Workforce Strategies team can help with workplace and job assessments, offer support with meeting regulatory requirements, and build risk management strategies to address workplace safety challenges.
How can Marsh help?
Workers exposed to extreme heat, both outdoors and indoors, face health dangers such as heat stroke and heat exhaustion. 50% of the Indian population suffered heat-induced ailments after India’s heatwave in 2022 (source: Marsh McLennan).
Extreme heat also causes chronic fatigue, which increases the likelihood of errors, and can be particularly dangerous in certain occupations.
Did you know?
Our risk engineers and business continuity specialists can help you plan your emergency response across a range of scenarios to reduce the severity of an event.
How can Marsh help?
Marsh leverages its state-of-the-art SentRisk solution to deliver insights into its clients’ supply chains and provide a range of risk management solutions.
We can work with you to identify your level of exposure to various suppliers down the value chain and develop an appropriate risk transfer program. This could include designing a parametric insurance program alongside contingent business interruption coverage to protect you against specific climate-driven supply chain risks.
How can Marsh help?
How can Marsh help?
Marsh can identify and assess the physical risk exposure of your key customers to reduce the impacts of climate risk on your overall business revenue.
When extreme droughts and heatwaves hit the Rhine River in Germany in 2018, resulting disruptions to shipping traffic forced cuts to production for chemical manufacturer BASF and steel producer ThyssenKrupp. Estimates suggest a 0.5% decrease in Germany’s GDP due to resulting supply disruptions (source: Marsh McLennan).
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Taiwan’s electronics industry was badly disrupted after extreme heatwaves and drought hit in 2021. One large contract chipmaker spent over US$26 million on additional water trucks amidst drought conditions. Uncertainty around water supply has motivated several chip companies to leave Taiwan permanently (source: Marsh McLennan).
Did you know?
The danger of flooding will be particularly severe in coastal areas, with many shoreline communities already facing an existential threat. By 2050, 570 coastal cities with a total population of more than 800 million people are expected to be impacted by sea level rise (source: Marsh McLennan).
Did you know?
The more exposed your business is to perceived risks, the higher your insurance premiums are likely to be. Commercial wildfire premiums jumped 300% in California between 2018 and 2021 (source: Marsh McLennan).
Did you know?
More than 170 countries have national policies on adaptation to manage the risks of climate change impacts (source: The London School of Economics and Political Science).
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