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Top CEOs 'underprepared' for climate-related financial risks

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A global survey of several hundred CEOs and CFOs at companies with $US1 billion ($1.45 billion) or more in revenue has found more than half in the Asia-Pacific region believe their companies are underprepared for climate-related financial risks.

Nevertheless, companies in the Asia Pacific region are better prepared than their North American or European counterparts, FM Global’s Natural Hazards VP Katherine Klosowski says.

“Most losses stemming from climate-related events are preventable, and loss prevention can help preserve a company’s value and resilience,” says Ms Klosowski, who also oversees structural engineering at the US-based insurer.

She warns that companies should not wait to act until the COVID-19 pandemic is over. “Failure to prepare could exacerbate the impact climate-related events have on an already fragile bottom line.”

Some 58 of the 100 APAC senior executives surveyed admitted their companies are not fully prepared to address the adverse financial impact of climate risk, while 66% believe their companies have “somewhat to no control” over the risk.

Bushfire, cyclones and drought topped the list as the three exposures that “concern their companies the most” and “could most negatively affect their financials.”

The online survey, conducted in February and polling 150 CEOs and 151 CFOs, found 87% of the APAC-based executives agreed their organisations are “somewhat to significantly exposed” to climate-related risks.