Introduction

The effects of our changing climate pose one of the biggest areas of uncertainty that we face, whether as individuals, organisations or societies. With this in mind, the Institute of Risk Management (IRM) Climate Change Special Interest Group (SIG) was formed in late 2019 with the main objectives of producing thought leadership, organising events and building engagement with the broader IRM membership, SIG members and other stakeholders.

One of the group’s first projects was to develop this practitioner’s guide to help risk managers and boards integrate climate change risk management into an organisation’s existing Enterprise Risk Management (ERM) framework. The SIG established a working group to review existing best practices from leading practitioners, latest research and literature and incorporate personal experiences on the subject, all of which have been compiled into this guide. This includes identifying and reporting climate change risks to boards and supporting strategic decision making. This is both a major challenge and a big opportunity for risk managers. The integration of emerging risk information and analysis will provide several benefits, including an improved risk appetite framework and risk mitigation strategies across most areas of an organisation’s risk profile. The focus has also been to support risk managers and SIG members across all sectors, not just financial services.

Climate change is such a large, complex and continually evolving subject. We cannot possibly hope to cover everything in a single practitioner’s guide. We have therefore assumed that organisations already have a robust ERM framework in place. The focus of this guide will be to provide background information, practical tools and pragmatic approaches that are enduring and will help risk leaders embed climate change risk management into their organisations. We intend to consider further work that will either signpost current best practice/thought leadership or develop ‘value add’ tools that will help risk leaders align their approach to the specific context in which they operate. To develop this document, the Climate Change SIG established a subgroup to examine and investigate the existing literature and contribute their personal experiences of the subject to create the main body of this text.

Contributing Authors Climate Change SIG Role Organisation

Martin Massey MIRM Chair OneRisk Consulting Ltd Bogdan Pletea IRMCert Member PMS Consulting Group

Darren Munday CFIRM Member Internal Consulting Group

Neil Cantle Member Milliman

Iain Felstead Member Senior Risk Leader