Climate change is no longer just an environmental issue; it’s a growing challenge for businesses around the world. Extreme weather events like wildfires, hurricanes, and floods are causing disruptions in industries and supply chains. At the same time, new regulations are pushing companies to understand and manage climate-related risks that could impact their finances and long-term success.
Tom Sabbatelli-Goodyer, vice president of Climate Risk Solutions at FIS Global, recently spoke about how businesses must adjust to this new reality. He pointed out that no business or region is safe from the effects of global warming. Recent wildfires in southern California, hurricanes with shorter off-seasons, and floods happening year-round are clear signs that old ways of handling risk are no longer enough.
Sabbatelli-Goodyer said companies need to change their approach and start actively managing climate risks. The first step is identifying which weather threats are most likely to affect them. While this can be overwhelming, tools like climate risk modeling can help businesses understand their current risks and predict future challenges. This helps them plan better for potential impacts on operations and finances.
He explained there are two main types of climate risks companies face: transition risks and physical risks. Transition risks come from the shift toward a low-carbon economy and involve changes in policies, technology, markets, and reputation. Physical risks, on the other hand, come from extreme weather events like storms and floods.
Regulatory pressure is also increasing. Public companies must meet new environmental and financial reporting requirements, and many business leaders find it hard to keep up with these standards. Gathering the right data isn’t just about following rules—it can help companies see how climate risks might affect their buildings, supply chains, and overall business.
Using this information, companies can take steps to reduce their risk. They might reinforce their facilities with storm-resistant materials, add flood protection, or even move operations away from high-risk areas. Sabbatelli-Goodyer believes that while predicting exact climate disasters is tough, being prepared through risk modeling can reduce damage and save businesses.
Because climate risk modeling is complicated and needs both climate science knowledge and technical skills, many companies don’t have the resources to do it on their own. Sabbatelli-Goodyer suggests outsourcing this work to providers with software and services that handle data efficiently. This approach can help companies comply with regulations and better assess their financial risks from climate change.
Climate change is here, and businesses need to act now to protect themselves. The next wildfire or flood could be closer than anyone thinks. Taking climate risks seriously and using tools to manage them can make all the difference in staying strong and sustainable in the years ahead.