Although the pandemic dominates the world’s attention, climate risk is simmering in the background, with 57% of Asia Pacific CEOs and CFOs reporting that addressing climate risk is a high priority in their company.
The findings stem from a global survey of several hundred CEOs and CFOs at companies with US$1 billion or more in revenue across a wide variety of industries in North America, Europe and Asia Pacific. The research was commissioned by FM Global, one of the world’s largest commercial property insurers, and conducted by ENGINE Insights, a leading market research and analytics firm.
Eighty-seven percent of Asia Pacific CEOs and CFOs indicated their organizations are somewhat to significantly exposed to climate risk and 6 out of 10 businesses say that they are less than fully prepared to address adverse financial impacts caused by climate risk.
“While Asia Pacific business leaders demonstrate a strong commitment to addressing climate risk, the priority given to natural catastrophe protection is concerning as typhoon seasons begin in the region, including in Japan and China, combined with the challenges the pandemic has placed on businesses – many of which are fighting to survive and recover,” said Alex Tadmoury, senior vice president, division manager of FM Global’s Asia Pacific operations.
“The combination of heightened frequency of natural catastrophes, especially in Asia Pacific, which sees more natural disasters than any other region, volatility in financial markets, and the threat of an economic recession couldn’t come at a worse time for many companies in this part of the world,” he added.
The survey results build upon the World Economic Forum’s report from earlier this year, released just before the pandemic struck, that declared extreme weather events plus failure of climate change mitigation and adaptation as top risks over the next 10 years.
“Fortunately, most losses stemming from climate-related events are preventable, and loss prevention can help preserve a company’s value and resilience, especially during the pandemic,” said Tadmoury. “However, the challenge many companies will face is adequately preparing for such events if stay-at-home orders remain in place, which could exacerbate the impact climate-related events have on an already fragile bottom line.”
The research is based on an online survey conducted in February 2020 of 150 CEOs and 151 CFOs equally across three regions (North America, Europe and Asia Pacific). Respondents lead companies over US$1 billion or more in revenue across a wide variety of industries. One-third of respondents lead companies of US$5 billion or more.
About FM Global
Established nearly 200 years ago, FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organizations, including one of every three Fortune 1000 companies. They work with FM Global to better understand the hazards that can impact their business continuity in order to make cost-effective risk management decisions, combining property loss prevention with insurance protection.