Climate risk analysis
Climate change affects your business: here’s why you should track it
Climate change is altering the context in which businesses operate. Organizations are facing a less stable environment, where unexpected events are becoming a reality more quickly. That is why it is essential to gain timely insight into both the risks and opportunities associated with this and to determine what actions are needed to remain future-proof.
Physical risks, such as damage caused by extreme weather or disruptions in the raw materials supply chain, can directly impact operational processes. At the same time, transition risks are becoming increasingly apparent: stricter laws and regulations, geopolitical uncertainties, changing markets, and new technologies that raise the bar. These developments can have direct financial, strategic, and reputational consequences for organizations. Furthermore, the CSRD or the WWKE (Resilient Critical Entities Act) requires companies to systematically identify these risks and report on them transparently.
At the same time, these changes also present opportunities. New technologies can enable more efficient and cost-effective operations, emerging markets create opportunities for innovation, and green financing is becoming more accessible to forward-thinking organizations.
A climate risk analysis identifies these risks and opportunities, thereby providing a crucial foundation for a robust, well-founded, and future-proof strategy.
Here’s how we do it — your own action plan in four steps
1. Assessment and scoping
Together, we map out the value chain to identify where climate risks may arise. Through exploratory discussions with internal stakeholders, we determine which parts of the organization, processes, and locations are most vulnerable. Based on this, we define the scope of the analysis: which risks, locations, activities, and opportunities will be included. We share this scope with the entire team so that everyone is on the same page.
2. Assessment of risks and opportunities
Using the validated scope, we conduct an in-depth risk analysis. For physical risks, we assess each location’s exposure to climate hazards and the vulnerability of processes and assets. For transition risks, we combine interviews with desk research, focusing on changing legislation, market trends, geopolitical developments, and technological changes. We then conduct a scenario analysis to examine how different future scenarios might influence risks and opportunities. This provides the organization with insight into potential impacts as well as the robustness of its current strategy. We discuss the results with the project team to ensure clarity and build buy-in.
3. Financial impacts
In this phase, we translate the identified risks and opportunities into financial impact. We assess which risks require direct investment, which influence strategic choices, and which actually present opportunities. If financial risk scales are not yet available, we develop them first. We then share these insights with the project team so that it is clear where the priorities lie and which scenarios are most relevant for decision-making.
4. Action plan and policy
Finally, we bring all the insights together in one or more workshops with internal stakeholders. Together, we determine concrete measures: what needs to be done, by whom, and when? We translate the outcomes into a clear action plan, including scope, required resources, a timeline, and responsibilities. We document all steps in a policy document that complies with relevant reporting requirements. In a concluding presentation, we hand over the action plan and policy to the project team, so that the organization can take the next steps with confidence and be well prepared.
Frequently asked questions
Physical risks arise from climate-related events, such as extreme weather, heat, or flooding. Transition risks relate to changes in legislation, technology, markets, and reputation. Together, they provide a comprehensive picture of how climate change can affect your organization, both operationally and strategically.
You calculate the costs of climate risks by determining which events could occur, how likely they are, and what financial impact they would have. For physical risks, for example, you look at potential damage to buildings, loss of production, or disruptions in the supply chain. For transition risks, the focus is on issues such as additional costs due to new regulations, investments in technology, or loss of revenue due to changing market demand. By combining these elements into risk scales and scenarios, you can arrive at a well-founded estimate of the total costs and identify where investments actually reduce risks or create opportunities.
By conducting a climate risk assessment, you gain insight into where risks arise, what the potential impact is, and what opportunities exist. In addition, the analysis helps you set priorities, support investment decisions, and formulate a climate-resilient strategy. The result is a concrete action plan that you can put into practice right away.
Climate risk management is the process by which an organization identifies, assesses, and actively manages climate-related risks and opportunities. It goes beyond mere insight: it helps organizations make decisions regarding strategy, investments, and operational measures. By systematically monitoring risks and linking them to policies and action plans, the organization becomes better prepared for changing circumstances. In this way, climate risk management contributes to business continuity, agility, and future-proof operations.
Getting started with your own team
We strongly believe in teamwork. We tailor our long-term strategic programs to the specific needs of your company or organization. We’re a dedicated team of three to six experts — diverse and resilient. They work together to guide your organization from development through implementation. This way, we ensure quality and guarantee the continuity of your sustainability initiatives. Ready to make an impact together?
A selection of our experts
Meet our expert, who — together with a strong team of fellow experts — contributes to our clients’ long-term success.
