The final SEC climate rule is coming, and it's important to assess climate risk for your business. Our six-step approach can help.
Climate-related financial risks, generally referred to as climate risks, are the financial risks linked to climate change. Climate risk can affect financial balance sheets and lead to losses through standard channels, such as diminished asset valuations or increased loan defaults.
Assessing climate risk can help organizations identify the potential impact of adverse climate changes on business operations and their ability to sustain themselves in the event of future climate hazards. In anticipation of the upcoming final Securities and Exchange Commission (SEC) climate disclosure rule,1 now is a great time for organizations to use their current risk frameworks to begin assessing the potential impact of climate change.
Even when relying on existing risk frameworks, addressing the far-reaching and complex issue of climate risk can be overwhelming. Organizations that might be unsure of where to start can use a six-step approach to help identify, analyze, and evaluate such climate risk and ultimately inform risk management decisions.