Climate risks, climate solutions: Watch FM’s panel at Reuters NEXT

This much is clear: Global businesses face growing climate risks.

But how do they ensure they understand those risks? And once they do, how can they find the financial resources to address them?

On Dec. 11 in New York City, Dr. Louis Gritzo, FM’s chief science officer, spoke on a panel at the Reuters NEXT conference to provide insights on those pressing questions. A video of the full panel can be found above.

For highlights, read on:

The biggest climate risk: Flood

Climate change is driving more frequent and more severe weather events around the globe, but of all the perils that brings, one stands above the rest, Gritzo says: flood.

“It does more damage than any other,” Gritzo explained. “It’s the most frequent hazard, and it’s the one that is increasing the sharpest in a warming climate.”

Addressing that risk can require broad and deep investments. These efforts can reach beyond an individual property’s boundaries. After all, directing water away from your own facility means it will go somewhere else. For businesses, resilience in the face of these perils could mean engaging in regional protection measures and other partnerships. Above all, addressing the risk means getting away from what Gritzo called “short-termism.”

"The big opportunity is … to move away from this flight to short-termism ... to longer-term investments in resilience,” Gritzo said. "It just takes that mindset to move beyond the here and now and think a little bit more about tomorrow."

Read more: Climate change likely a key contributor to Europe’s devastating autumn floods

The biggest risk of all: Fire

Companies around the globe are driving toward electrification as a means of reducing carbon emissions. That’s an opportunity, but it also brings other risks, Gritzo explained.

“Fire is still the number one source of property damage,” Gritzo said. “As important as climate is, buildings and businesses still are more damaged by fire than anything else. The number one source of ignition for fire is electrical. As we move to more electrical systems, we need to have smarter systems involved … to make sure that we’re catching fires early and putting them out.”

Read more: Lithium-ion battery hazards: FM releases first-ever comprehensive guidance

The big opportunity: A mutual model

So how does a global business facing these risks address them? One way is with an insurance partner like FM. In recent years, FM launched the FM resilience credit for eligible policyholders. The credit is applied as a premium offset, which recipients may use to invest in their climate resilience and renewable energy strategies. FM’s mutual model, in which its policyholders are its owners, enables these types of initiatives.

Over the past three years, FM has allocated more than $1 billion in resilience credits. That $1 billion has driven a reduction in potential economic impact of more than $30 billion.

“A payoff of 30 to one – that’s sellable to a CFO,” Gritzo said. “I think the big key here is to how to turn these risks into opportunities, how to flip them upside down.”

Read more: FM Announces US$400 Million ‘Resilience Credit’ to Support Client Investment in Climate Resilience