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The Governor of the Bank of England, Mark Carney, gave a talk yesterday (29th September) to Lloyd’s of London on climate change and financial stability . He highlighted the risks that climate change poses to business, in terms of physicals risks, liability risks and the risks involved in transitioning to a new energy economy. At the heart of his speech was a call for businesses to understand their risks, and to be transparent both about their exposure and how they assessed it.

Climate scientists and other researchers have over the years developed increasingly sophisticated and rigorous ways of assessing how climate may change in the future and alter risks. We have shown how the risk of experiencing extreme events is changing very rapidly, and also how these risks vary from place to place. Impacts in one part of the world affect other parts of the world, and in many places climate change will hit from several directions – more heatwaves, more floods, more droughts and more storms. We know this from several detailed studies and reports from the Intergovernmental Panel on Climate Change (IPCC).

Society needs to understand how climate change increases risks to business. Organisations in turn, need to consider how they can incorporate climate change into their risk management in practical way.

As Mark Carney urged, businesses need to understand their risks and start acting now.

About the author

Nigel Arnell is the Director of the Walker Institute at the University of Reading, and Professor of Climate System Science in the Department of Meteorology. Professor Arnell has been researching the impacts of climate change for over 20 years and has helped develop methods used in the UK for assessing climate change impacts on water supply companies.

He has close working relationships with companies in a number of business sectors and with UK and other government departments and agencies. Professor Arnell has contributed to all the assessment reports of the Intergovernmental Panel on Climate Change (IPCC) since 1995.

In his new book,  A Short Guide to Climate Change Risk, Nigel Arnell reviews the critical area of risk posed to businesses and other organisations by climate change and considers how they can respond to this threat.