Climate risk management: an imperative for businesses
hace 2 year
By: Pia Zevallos - Libélula's General Manager
The recent IPCC report warns of the imminent threat of water scarcity, endangering food security in Latin America. We are exposed to catastrophic damage to infrastructure due to floods and landslides, as evidenced by the devastating passage of Cyclone Yaku in Peru, causing losses estimated at US$345 million, representing 0.1% of the country's GDP. In addition, as a result of extreme weather events, vector-borne epidemics such as dengue fever have skyrocketed, highlighting the urgency of preparedness and adaptation.
The prevailing question is: what have we learned from these experiences and what steps are we taking to address impending challenges, such as the coming Global Niño? Latin American companies face a crossroads: more than 50% of CEOs recognize their companies' exposure to climate change-related risks in the next five years, but only 17% have implemented measures to protect themselves (pwc, 2023).
Understanding and anticipating these risks and opportunities is crucial. But what exactly does assessing climate change risks and opportunities entail? The process begins with a thorough analysis of how climate risks affect the business, considering not only the geographic location, but also the operations, value chain and surrounding communities. For example, extreme rainfall may disparately impact an agro-export company in a specific valley or a distribution company that covers the entire country. This analysis includes identifying regulatory and market changes that could offer strategic advantages. From this detailed understanding, risks and opportunities are prioritized, allowing companies to focus efforts and resources on a sound adaptation plan.
Climate risk assessment is not only a preventive measure, it is a path to business resilience and competitiveness in an increasingly uncertain world. At a time when preparedness is synonymous with survival, Latin American entrepreneurs must act now to safeguard their businesses, generate comparative advantages and contribute to a sustainable future.
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