Climate Risk Management

A comprehensive climate risk management strategy is essential. The effects of human action-driven climate change are eroding the progress made towards achieving the UN’s Sustainable Development Goals (SDGs). Extreme weather events like cyclones, floods and heatwaves are rapidly increasing in rate and severity. At the same time, there are slow-onset events.

Defining climate risk management

So, how do we mitigate these climate risks? To address these threats, they need to be identified and assessed. It is then that the current and future climate-related risks need to be analysed to develop measures to prevent and reduce their impacts. Thereafter, strategies need to be put in place to handle the uncontrolled risks and be able to proactively respond to disasters, curtailing further losses and damages.

Comprehensive Climate Risk Management (CRM) is a systemic framework that seeks to anticipate, avoid and prevent all types of climate risks, as well as to absorb remaining impacts from extreme weather events and slow-onset changes. Thereby, it integrates the two research strands of Climate Change Adaptation (CCA) and Disaster Risk Reduction (DRR) into a sustainable development framework.

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Climate Risk Management response measures

Response measures to combat climate events mainly include adaptation and mitigation. Adaptation refers to acting appropriately to avoid or reduce the harmful effects of potential climate risks. Alternatively, it also involves utilising the opportunities it may present. This entails structural reform at a national level- especially for developing countries. In turn, this will embed climate risk management into their plans and policies.

Futhermore, an increase in opportunities will become available in the policy space to transform and build resilient economies. Building defences to guard against a rise in sea level and broad modifications to infrastructure are useful. Even diversifying into various sectors instead of relying on a few climate-sensitive sectors is another instance. Local authorities can also install effective draining pavements to manage floods and stormwater and enhance water storage and use.

Concurrently, mitigation is about reducing the adversities of the climate crisis. This can halt or cut greenhouse gas emissions that pollute the atmosphere. An example is to allocate finances to develop a diverse low-carbon economy. This has to be fuelled by renewable energy sources and green technologies. This is a form of mitigation as well as an adaptation strategy. Forestation, protecting and increasing mangroves, and building more sustainable transport (like electric vehicles) are also effective mitigation approaches.

What are the economic impacts of climate disasters?

The socioeconomic impacts of climate change and disasters are immense. Approximately 3.3 to 3.6 billion people live in situations that imminently expose them to climate change. This is roughly 40% of the world’s population. People who live in high-risk areas for climate events like low-lying coastal regions, high mountain areas and in the Arctic have become more risk averse. This is mainly due to the recurrent loss of lives and destruction of assets and properties. Because of this, people become reluctant to invest in resources that benefit human well-being, favouring humans economically.

Similarly, when a country diverts its capital to provide relief for recovery and rebuilding actions, it deprives the opportunity of allocating these funds to economic development. Being exposed to climate risks in susceptible circumstances, along with inadequacy to moderate or manage the adverse impacts leads to disasters and losses. Climate change adversely affects developing economies and emerging market economies. These nations are the least equipped to face these consequences.

Inaction has already cost developing nations a two-fold increase in adaptation expenses in the last ten years. These costs will potentially rise with surging global warming, hitting $300 billion in 2030 and $500 billion in 2050. Hence, climate risk management is fundamental to development. Identifying and lowering the climate risks can save lives, livelihoods, and possessions, thus fostering development. Identifying and lowering the climate risks can save lives, livelihoods, and possessions, thus, fostering development.

International climate risk management Policies and Agendas

International policy agendas have recognised the importance of climate risk management to counter the effects of climate change. These include the Paris Agreement (United Nations Framework Convention on Climate Change, UNFCCC), the Sendai Framework for Disaster Risk Reduction (United Nations Office for Disaster Risk Reduction, UNDRR), and the 2030 Agenda for Sustainable Development.

Climate risk management through mitigation

The Paris Agreement, adopted in 2015, is a landmark binding agreement. It aims to limit global warming well below 2°C (which is above pre-industrial levels). The new target is to restrict the global average temperature rise below 1.5°C. This is as the UN’s Intergovernmental Panel on Climate Change (IPCC) denotes that exceeding it can worsen climate risks. It also stresses that the past greenhouse emissions alone will not push global warming at about 1°C currently above pre-industrial levels, further by another 0.5°C. So, achieving this target is possible by zeroing these emissions immediately. Accordingly, to attain this target, the maximal greenhouse gas emissions must be reached by 2025 at the latest, and decrease 43% by 2030.

Climate risk management through adaptation

Similarly, the Sendai Framework for Disaster Risk Reduction (United Nations Office for Disaster Risk Reduction, UNDRR), was adopted in 2015. It prioritises activities to avert future risks and minimise current disaster risks. Its four action-oriented priorities include understanding disaster risk and building up risk governance. The third priority is to invest in ways to reduce disasters to improve adaptability. The final priority is to advance disaster proactiveness to respond better, and to “Build Back Better” in recovery, rehabilitation and reconstruction. The goal is to tremendously dampen the catastrophic impacts of disasters by saving lives, livelihoods, and properties. The goal also aims to protect the environment and economic systems.

Aligning adaptation and disaster risk reduction through data

In accordance with the Target E of the Sendai Framework, the United Nations Office for Disaster Risk Reduction (UNDRR) launched the Comprehensive Disaster and Climate Risk Management (CRM). This flagship initiative supports integrating scientifically informed risk reduction strategies into national policies, for active climate change adaptation. This Strategic Framework highlights the importance of integrated planning to tackle the climate emergency.

Furthermore, many challenges are hindering its implementation. There is a lack of knowledge, inconsistent interpretation of climate risks, restricted expertise in incorporating climate information into risk reduction strategies, and promoting climate adaptation practices. Besides, other concerns include fragmented institutional systems and funding. Nevertheless, it is pivotal to implement integrated planning as otherwise it can exacerbate the climate crisis.

Residual climate risk management

Despite several effective climate policies, the consequences of climate change impacts and the potential loss and damage from these events, still pose a risk. As per IPCC, 2019, residual risk is the risk that remains, following adaptation and risk reduction efforts. To address this residual risk GIZ’s Global Programme on Risk Assessment and Management for Adaptation to Climate Change (Loss and Damage) (GP L&D) has built a climate risk management (CRM) framework to prevent, reduce, and tackle losses and damages. Thus, the idea of CRM consists of the below mutually reinforcing steps, and it is essential that all the relevant stakeholders from various sectors and levels take part in the formulation of the CRM.

Climate risk financing and insurance

The framework intends to deal with and decrease the ramifications of climate change by avoiding climate risks by minimising greenhouse gas emissions. This is the best possible mitigation approach. Similarly, it aims to reduce climate risks via adaptation, and risk management. Meanwhile, it also addresses residual climate risks through instruments like climate risk funding or transformative measures such as livelihood diversification. For instance, crop and income diversification are exceptional ways to cope with risk and deal with economic and climate shocks to advance livelihoods.

In a similar vein, Global Shield against Climate Risks is a G7 initiative that was officially launched at the COP27 climate conference in 2022. This was established along with the Vulnerable Twenty (V20), which is a group of high-risk nations. The aim is for the industrialised nations to provide easy and quick access to support the poor and vulnerable people and establishments from developing countries during climate emergencies. This will cut disaster effects, save lives and livelihoods, protect the resilience of the economies of these countries, and sustain any progress made. Accordingly, the Shield consolidates acts associated with climate risk financing and a proactive approach through preparedness under one roof.

why Is it essential that we focus on Climate Risk Management?

The temperature rise beyond 1.5 C will elevate disaster risks that can be uncontrollable and more frequent. Extreme climate events have increased twofold in the last two decades compared to the former two decades. Climate change also generates slow-onset environmental alterations like increasing sea levels, groundwater salinisation and worsening desertification. These disasters lessen the capability of climate change adaptation. These adaptation solutions refer to changes in processes and systems in devising action plans to respond to the effects of current and potential climate change. Meanwhile, if risk is excluded from these adaptation strategies then it can give rise to new threats and lead to ineffective adaptation.

The climate crisis is reversing the progress achieved in reducing inequalities, and social dislocations, while overturning development advances. Climate emergency has direct repercussions on starvation, impoverishment, conflict, water shortage, infrastructure integrity, hygiene, illness and survival. Thus, climate information-driven risk reduction approaches are imperative for effective climate change adaptation.

Climate change reverses the progress of SDGs

The IPCC reports highlight that climate change has altered several oceanic ecosystems in addition to affecting flora, fauna and humans. The Special Reports on Global Warming of 1.5°C has particularly emphasized that confining global warming to 1.5°C can possibly save hundreds of millions of humans from becoming re-impoverished.

Concurrent and frequent climate change effects and disasters have varying cascading effects on human health due to recurrent exposure, compounding vulnerability and augmenting overall risk. The damages to possessions and infrastructure can jeopardise livelihoods, access to stable education socioeconomic status, job security, and aggravate poverty. Climate events like heatwaves destroy crop yields alleviating food shortages and worsening hunger.

Women and girls rely more heavily on climate-sensitive sectors like agriculture- especially in low and lower-middle-income countries. To earn a higher income during these tough times, it has become common for girls to drop out of school to support their families. It is then that the climate crisis acts as a threat multiplier and magnifies the prevailing gender inequalities. This further exacerbates the unique risks to female livelihoods, health, and protection against violence, trafficking and child marriage. Consequently, women and girls are the most affected by climate change.

moving forward

Finally, there is undoubtedly an urgent call to implement the tried and tested climate risk management strategies based on the best available scientific knowledge. A tremendous transformative outlook to climate adaptation, backed by extensive public financing and green industrial practices is pivotal in this fight against climate risks. This will climate-proof the existing and future climate threats, creating job opportunities and fostering economic development.

THRIVE advocates for the mitigation of climate change and provides scientifically informed solutions through research, to educate the people to not only survive the climate crisis, but to thrive beyond through adaptation and mitigation strategies, aligned with international frameworks.

A THRIVABLE Framework

At its core, ‘sustainability’ is simply defined as the ability to continue to survive. ‘Thrivability’, by contrast, is the next step, beyond sustainability. THRIVE believes that humanity can do better with the knowledge currently available to us. We want to instil the idea that sustainable solutions not only prevent disaster, but offer the potential for societies to flourish.

The THRIVE Framework examines issues and evaluates potential solutions in relation to this overarching goal of thrivability. It is about making predictive analyses using modern technology that supports environmental and social sustainability transformations.

We recognise that human happiness can sometimes compete with environmental well-being, which is why we use our ciambella chart to illustrate the ‘thrivable zone’. This is the area between a ‘social floor’ (the minimum required for people to be content in their everyday lives) and an ‘environmental ceiling’ (the maximum damage that we can do to the environment before it becomes unsustainable). Overlaid on these thrivable zones are visual measurements that show impact – whether something is inside the thrivable zone – or exactly where it falls short. 

To learn more about how The THRIVE Project is researching, educating and advocating for a future beyond sustainability, visit our website. You can follow our informative blog and podcast series and learn about our regular live webinars featuring expert guests in the field. Sign up for our newsletter to receive regular updates.