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Manufacturing production line

Why manufacturers should build climate change resilience

According to the UN Intergovernmental Panel on Climate Change, temperatures will see a 3.3°C rise by 2100, despite the progressive action by governments and companies. This exceeds the 1.5°C threshold to avoid climate change impacts.1

Even with efforts to reduce greenhouse gas emissions, we cannot avoid all the consequences of climate change. This creates a number of business risks, which is of particular concern for those in the manufacturing industry who may have premises or global suppliers in climate-vulnerable zones.

The threat from climate change creates a number of physical and operational risks, including:

  • extreme weather events, such as flooding and extreme temperatures
  • increasingly frequent storm and hurricane events.

How to build climate change resilience

The global pandemic has highlighted how interconnected supply chains and businesses are and the need to better understand, prepare, and mitigate new risks. Combine this with the threat of heavy rainfall, storms and flooding and the negative effect on businesses will likely intensify.

An end-to-end catastrophe approach will help organisations build resilience through the following phases:

  • Diagnostic: Profile and prioritise which sites drive natural catastrophe risk as this will drive insurance premiums, excesses, and terms and conditions.
  • Survey and build: Explore an asset-specific resilience assessment and action plan to identify areas in need of further risk mitigation.
  • Implement: Act on the survey/action plan and produce a hazard emergency response plan. This will also enable insurers to better understand the exposures and rate accordingly.
  • Insurance: Recognise risk and resilience improvements, so that insurers will have a broader view of the risk and provide appropriate pricing, excesses, and terms and conditions.
  • Monitor: Review and update plans and mitigation strategies based on the changing nature of the risk.

Many businesses are taking action to mitigate the effects of climate change. This includes building resilience to quickly bounce back from shocks, such as storms and floods when they do strike - particularly as they become more frequent, complex, and unpredictable.



1 Reuters, Dec 2018