Assess Your Physical Risks to Solve the Climate Risk Puzzle

With record-breaking high temperatures on the rise, real estate owners are facing very real climate risks that could negatively impact their portfolios. And with unclear regulatory requirements, evolving market expectations, and shifting business realities, it’s hard to know what your next steps should be. Last month, we discussed how quantifying your footprint is the best way to start solving the climate puzzle. Over the next several weeks, we’ll share additional steps you can take to ensure that your properties are climate-ready.

I’ve quantified my footprint. Now what? 

Real estate assets are real-world structures, subject to the effects of weather and changing climate. Any robust climate strategy should assess your exposure to climate impacts in terms of structural damage, resource scarcity, or impacts to operations, both at the asset and portfolio level.

Most proposed regulations require some estimate of the financial impacts associated with physical climate risks to your real estate. As a starting point, we recommend applying a ‘value at risk’ approach to quantifying this information. 

There are two kinds of risks to be on the lookout for: acute risks, such as floods and hurricanes, and chronic risks, such as rising sea levels and increasing temperatures. These risks present increasing financial burdens including damage to assets, interruption of operations, and disruption of supply.

Assess your risks sooner than later

So how do you assess these risks? Take these three factors into account:

• Exposure: for all assets, define scope and metrics to measure risk
• Hazard: for all locations relevant for the analysis, assess which natural disasters can occur (intensity x probability) under current and future climate
• Vulnerability: for all assets exposed, how much damage could be caused by natural disasters of a given intensity

Need help? Trust a pro

If this sounds like a lot of work, it doesn’t have to be. Conservice is well-equipped to help you. With assets like the Climate Risk Tracking tool, we use your property and climate-specific information to evaluate your specific risks. We’ve literally published eBooks on this topic. Talk with our Strategic Consulting team to learn more!

Stay tuned for more!

We have two more puzzle pieces to unveil as part of our Solving the Climate Risk Puzzle campaign! Be sure to check back soon.

Kellianne Gammill

Copywriter

Kellianne Gammill is an experienced wordsmith and Copywriter at Conservice. More importantly, she is a big fan of taxidermy and Pitbull.