Many Australian businesses consider climate risk a “slow burner“ and give greater priority to other threats, according to a new report.

Almost one-quarter of companies rank natural disasters such as flood, bushfire, drought and extreme heat as low or medium priorities, a survey for the FM-sponsored report has found.

That is a higher proportion than in six other Asia-Pacific markets studied: Hong Kong, India, Malaysia, Singapore, South Korea and Thailand.

Consultant BDO Australia’s national lead partner for risk advisory Marita Corbett – one of six experts interviewed for the Sight Unseen report – says many Australian businesses view environmental risks as long-term challenges and prioritise them less.  

“Climate risk is probably not highest on their list because it’s considered a slow burner and not an immediate issue.“

Such leaders focus on immediate concerns and familiar risks, often overlooking long-term or unfamiliar threats, she says.

Insured losses from declared weather catastrophes amounted to nearly 1% of Australian GDP over the past five years, more than triple the figure from 1995-2000.

ABM Risk Partnership founder Brett Palmer says the 2022 floods proved executive confidence in mitigation of climate risks “can often be unfounded”.

“The worsening effects of climate change are anticipated to make such unexpected events more frequent,” he said. “Ensuring the effectiveness of preventing controls is key.”  

In contrast to climate, cybersecurity threats and data breaches are deemed high-priority risks by 90% of respondents to the survey of 560 executives.

Commercial property insurer FM warns unseen risks – “sneaky threats that can catch even the savviest executives off guard” – cause considerable pain.

It says Australian businesses are underprepared for cyberattacks, climate events, geopolitical shifts, supply chain disruptions and other “under the corporate radar” risks.

Ms Corbett said: “Australian businesses are failing to learn from the impacts of disruption. The pandemic exposed our supply chain fragility, for example, but we’ve continued to struggle with global shipping disruptions since then.” 

FM says inadequate use of data is a major challenge, as are weaknesses in risk maturity, including lack of safety nets and siloed risk management.

“Our research highlights weaknesses in risk management at Australian organisations that are heightening their exposure to unanticipated developments.”

FM Australia operations manager Andrew Stafford says the research underscores the importance of “proactive risk management and resilience building” before unexpected risks escalate into major crises.

“Australian businesses face immediate challenges and financial consequences from climate change, cyber threats, and data breaches ... By understanding and addressing these vulnerabilities, businesses can protect and safeguard their operations,” he said.

See the report here.