Climate change is no longer an abstract worry for the distant future. It's a balance-sheet reality today. In 2024 alone, natural disasters caused roughly $368 billion in global economic losses, according to
Turning to climate risk assessments
To address this challenge, organizations are turning to climate risk assessments. These forward-looking analyses use climate science and risk engineering to project how hazards may evolve in 2030, 2050 and even 2100. These examine a range of perils, including:
- Sea level rise and storm surge driven by warming oceans.
- River flood and extreme precipitation events modeled at 50-, 100-, and 500-year return intervals.
- Wildfire and fire weather stress based on ignition likelihood and spread potential.
- Drought conditions measured with water balance indices.
- Heat stress tied to rising maximum temperatures from heat waves and prolonged chronic general temperature increases.
Rather than looking backward at historical losses, these assessments forecast how climate volatility will shape risks decades into the future — and what it means for a company's specific sites, supply chains and long-term resilience.
Our team conducted a precipitation-focused site survey and uncovered the underlying vulnerabilities: low points along the building's perimeter, a facility built at a naturally low elevation, and a public rainwater grid unable to handle runoff. With this knowledge, the client could act decisively. The assessment produced 20 targeted recommendations, from drainage improvements to structural adjustments, all aimed at preventing future losses.
Why climate risk assessments are a strategic advantage
Climate risk assessments do more than quantify exposure. They create strategic advantages in three key areas:
- Resilience and compliance
They help companies future-proof operations and align with regulatory expectations such as the EU Green Deal and EU Taxonomy. By quantifying site-specific exposures, businesses can prioritize adaptation projects — from infrastructure upgrades to supply-chain diversification. - Insurance renewals and insurability
Assessments serve as credibility markers. They demonstrate to underwriters that risks are not being ignored but actively managed. For brokers and insureds, this can mean stronger negotiating power and potentially better terms at renewal. Banks also want to ensure that financed assets will be well protected against the impact of climate change, because the assets lifetime and the duration of the financing often go hand-in-hand for one to three decades. - Business continuity and reputation
Climate assessments also play a role in stakeholder confidence. Boards, investors, and consumers increasingly expect companies to demonstrate not just sustainability commitments but concrete steps toward climate resilience.
A practical example of assessments in action
Consider a recent case where a manufacturing client faced repeated flooding from heavy rain events, each one inflicting roughly €500,000 ($576,560) in damage. A climate risk assessment confirmed that such rainfall patterns were likely to persist in the years ahead.
Our team conducted a precipitation-focused site survey and uncovered the underlying vulnerabilities: low points along the building's perimeter, a facility built at a naturally low elevation, and a public rainwater grid unable to handle runoff. With this knowledge, the client could act decisively. The assessment produced 20 targeted recommendations, from drainage improvements to structural adjustments, all aimed at preventing future losses.
The European Imperative: EU Green Deal and EU Taxonomy
For companies headquartered in Europe — or simply doing business there — the need for climate risk assessments goes beyond resilience and insurance. It's about regulatory survival.
The EU Green Deal sets a legally binding target of carbon neutrality by 2050. To achieve this, the EU is rolling out sweeping regulations that require businesses to quantify their climate impacts and mitigation plans. Companies that cannot demonstrate how they will adapt face reputational risks, regulatory penalties and limited access to capital.
The EU Taxonomy provides a classification system that determines which economic activities can be considered environmentally sustainable. For businesses, this framework is tied to financing. To secure loans or investment for adaptation projects — such as flood defenses, facility retrofits or renewable energy upgrades — organizations must show alignment with the taxonomy's requirements.
Mandatory climate-related disclosure is becoming the norm. European regulators are pushing for standardized, comparable climate-related risk reporting, and climate risk assessments are the evidence companies need to comply.
Looking ahead
As we move into the next decade, climate volatility will only intensify. Scientific advances will sharpen the precision of hazard modeling, while regulations will grow more stringent. Insurance markets will continue recalibrating, with reinsurance costs rising and new models of coverage — such as parametric products — emerging.
Organizations that embed climate risk assessments into their strategies today are not only preparing for future hazards but positioning themselves as better risks in the eyes of insurers, regulators and investors.
