Climate Change and Natural Disasters within Corporate Risk Management Scheme
In the past, companies didn’t seem to care so much about the effect of climate change or natural catastrophe to their business and operations, but as time goes by, it is proven that not only natural disasters or climatic change can affect companies in operation, they are also proven to create another economic and financial burden for the companies; which can affect the longevity and performance of the companies themselves.
No one can predict the climate. Companies may be sure that they are safe from any harms, but the instability of climate and the changes in the world we are living today bring significant changes to everyone, including companies, corporate, and organizations. In fact, business experts can test their businesses’ resilience through the climate change – and whether they have prepared for the worst or not. It is true that natural disasters might not be the major cause for the performance of the companies, but things are different for the future. And considering that the cost of dealing with natural disasters have increased quite significantly within the last decade, companies should be ready for it and come up with solid risk management scheme.
Some companies have managed to reduce the possibility of risks through combination of insurance protection, liquidity management, post event recovery measurement, and disaster risk management. Companies should start thinking about having reinsurance linked investment, insurance scheme, catastrophe bonds or regional risk financing group that can protect societies, as well as economies, during the event of natural disasters take place. They will certainly reduce financial burden and economic hardship; as well as making recovery period go faster.