The unprecedented spate of bushfires impacting huge swathes of southern and eastern Australia throughout the summer of 2019/20 has pushed climate risk firmly into the national consciousness.
Meanwhile, brokers have been grappling with how they can help their clients screen for climate-related exposures and future-proof their businesses. NIBA in partnership with Allianz has published a guide on what can brokers do to advise clients in managing and mitigating risk.
Finity Consulting Principal Rade Musulin said, “There are three kinds of risk that arise from the climate problem. There’s what we call physical risk, which is basically bushfire season becoming longer or cyclones migrating poleward that damage the environment and assets. Then there’s transition risk – that is the changes would occur in our economy if we were to move towards decarbonisation.
“The third one relevant to brokers is litigation risk – the risk that boards of directors, managers and other responsible parties are sued by either shareholders or other entities who say they’ve been damaged from an organisation failing to take action to mitigate climate risk.”
Things for brokers to consider when dealing with clients exposed to climate risk:
• Investigate trends in particular occupations and geographies to advise on mitigation and management strategies for clients.
• Realise that research and data is ongoing in the climate change space. Make an informed extrapolation for specific risks relevant to your client base.
• Don’t bombard clients with data – it has the propensity to be misunderstood. Clear communication is paramount.
• There are three types of risk inherent in climate change – physical, transition and litigation.
• Consider how events may disrupt your client’s business and be prepared to have a conversation with them on future-proofing strategies.
You can access the full NIBA Allianz Broker Guide here.