Climate Change Adaptation will mean not only physical engineering solutions such as the hardening of infrastructure, but also new design criteria, emergency planning, and wider changes in decision making processes to become more resilient to an uncertain future. Our work is based on the following five elements:
- A broader view;
- Governance and standards;
- Risks and uncertainty;
- Vulnerability and resilience; and
Taking a broader view of climate risks
In a globalized economy, business and society are becoming more complex and interdependent, and an extreme weather event can threaten to bring down entire systems.
The resilience of businesses is interdependent with broader systems, such as supply chains, infrastructure and communities. It is important to understand these systems in combination with global trends and the mutual dependence between business and society. A system thinking approach can help reveal how elements are organized and interconnected, and provide insight into how the entire system develops.
Pushing governance and standardization regimes
It is essential to develop a deeper understanding of public and private climate change governance, and work with stakeholders to translate this into specific standards or frameworks that will shape business responses to physical and non-physical climate change risks and opportunities.
Businesses already rely upon management and corporate governance systems to cope with the rapidly changing, interconnected and globalized business context. DNV GL observes that these systems must now be deployed to deal with the greatest change driver of them all: the uncertainty, complexity and systemic nature of climate impacts. This encompasses both physical and non-physical risks, including policy and legal, technology, market and reputation risks – all of which have the potential for substantive financial impacts.
Estimating risks and characterizing uncertainty
A changing climate creates hazards that are difficult to predict, and this uncertainty presents a challenge to decision makers.
Climate-change risk analysis should therefore provide decision makers with an understanding of what losses and gains are likely to occur in the future, what measures should be taken to reduce losses and when to take them. Risk-based decision-making can evaluate a range of possible solutions and we have developed a risk-assessment framework, which takes into account climate hazards, vulnerabilities and losses. By quantifying risk in monetary terms, this framework creates a transparent basis for decision makers to find the most cost-effective portfolio of adaptation measures.
Managing vulnerability and resilience
To reduce vulnerability and build resilience in business and society, a comprehensive risk-management strategy is needed.
In order to make the right adaptation investments, we need to have a comprehensive strategy that allows us to compare options in a structured way, to find the most cost-effective portfolio of actions. Based on our knowledge and expertise in managing risk, we are developing frameworks for building resilience. Building upon a risk assessment, this strategy should encompass leadership, flexibility, innovation, response, recovery and learning.
Encouraging collaboration for a greater impact
In interconnected systems, collaboration is essential as all parties benefit from each others' resilience.
Businesses need trustworthy, accessible knowledge about climate science and adaptation. Although adaptation requires local solutions, there are many lessons, methods and best practices that can be shared across sectors and geographies. Climate change and extreme weather can have impacts beyond corporate fencelines. Many factors contribute to the complex risk picture that organizations are facing, and risks are connected in many ways. By working together, businesses and communities can coordinate their efforts in preparation, response and recovery to extreme events.