Global Climate Resilience and Adaptation Hub

How should I think about adaptation, and how can Marsh help?

Explore the framework further through our interactive infographic below:

Physical assets, operations and people, and emergency response

To protect your physical assets, you need to identify the various climate risks you are exposed to and the financial impacts that could result. We can then work with you to explore a range of resilience measures, their costs and benefits, and a roadmap to implement them at exposed asset sites.

How can Marsh help?

Marsh works with multiple climate risk models to fit your specific requirements and leverages the latest approaches to climate risk modelling, coupled with on-the-ground engineering surveys, to help you identify and implement appropriate resilience measures. Insurance and adaptation and resilience measures go hand in hand – both can protect your business against physical damage and unlock new business opportunities.

Did you know?

Approximately 18% of the global population is currently threatened by flooding, and even limiting global warming to 2°C would cause this percentage to double (source: Marsh McLennan Flood Risk Index).
There has been an 181% increase in the global number of flood events between 2010-19 compared to the years 1980-89 (source: Marsh McLennan).

To better manage your operations and people, you need to understand how chronic and acute physical risk events affect your processes and your workforce. We can then look to a range of financial, strategic, and planning measures to reduce the impact of these on your business. For example, inspection regimes may need to change in different climates and your people may need to change the way they work.

How can Marsh help?

Our global risk engineering teams, together with Mercer, a Marsh McLennan business are leading specialists in people and health risk.

We can arrange insurance solutions to compensate your employees in the event they are impacted by extreme weather, or to compensate your business for interruption in operations. Our Advisory Workforce Strategies team can help with workplace and job assessments, offer support with meeting regulatory requirements, and build risk management strategies to address workplace safety challenges.

Did you know?

Workers exposed to extreme heat, both outdoors and indoors, face health dangers such as heat stroke and heat exhaustion. 50% of the Indian population suffered heat-induced ailments after India’s heatwave in 2022 (source: Marsh McLennan).

Extreme heat also causes chronic fatigue, which increases the likelihood of errors, and can be particularly dangerous in certain occupations.

Prudent businesses have plans in place for how to respond to a range of emergencies. However, will those plans still work in a changed climate? For example, will you still have water available to tackle a fire during a drought, and could emergency services reach you in a flood?

How can Marsh help?

Our risk engineers and business continuity specialists can help you plan your emergency response across a range of scenarios to reduce the severity of an event

Did you know?

Firefighters lacked water to put out the wildfires that ravaged Maui last year due to extreme environmental conditions and a system collapse. Authorities were forced to resort to people evacuations, leaving whole communities destroyed. (source: The New York Times)

Suppliers, customers, critical infrastructure, resources and ecosystem services, governments and regulators, capital providers, and communities

Supply chains are vulnerable to climate change. The ripple effects of disruptions in higher tiers of your supply chain can directly impact your ability to operate. To understand your supply chain’s climate risk exposures, you need to build an accurate picture of your supply chain, how products flow, the potential bottlenecks, and the consequences to your business if critical components are disrupted by climate risk events.

How can Marsh help?

Marsh leverages its state-of-the-art SentRisk solution to deliver insights into its clients’ supply chains and provide a range of risk management solutions.

We can work with you to identify your level of exposure to various suppliers down the value chain and develop an appropriate risk transfer program. This could include designing a parametric insurance program alongside contingent business interruption coverage to protect you against specific climate-driven supply chain risks.

Did you know?

Supply chains have been growing in complexity, and companies are increasingly exposed to climate risk beyond their borders. 76% of all trade occurs through global supply chain. (source: Marsh McLennan)
82% of businesses do not have full visibility into their supply chain and logistics operations. (source: American Productivity & Quality Center (APQC), estimate by Marsh McLennan).

Just as your upstream suppliers can be disrupted by climate change, so too can your downstream customers, affecting their purchasing habits.

How can Marsh help?

Marsh can identify and assess the physical risk exposure of your key customers to reduce the impacts of climate risk on your overall business revenue.

Did you know?

Disruptive physical impacts can lead to shifts in demand from customers. Sectors that often bear the brunt of this include oil and gas, real estate, retail, automotive and transport, power generation, and agriculture.

The infrastructure that your business relies upon can be easily impacted by climate change events, especially given that damage to a single bridge, highway, railway, or port can bring the entire chain of connectivity to a halt.

How can Marsh help?

Marsh can work with you to understand key points of dependency and their potential disruptions from climate change in order to develop contingency plans.

Did you know?

When extreme droughts and heatwaves hit the Rhine River in Germany in 2018, resulting disruptions to shipping traffic forced cuts to production for chemical manufacturer BASF and steel producer ThyssenKrupp. Estimates suggest a 0.5% decrease in Germany’s GDP due to resulting supply disruptions (source: Marsh McLennan).

The resources and ecosystem services that your business depends on and derives value from can be critically impacted by climate events. Heatwaves and droughts can create severe water shortages that impede business operations, for example, and the availability of agricultural inputs can be affected. Businesses need to understand their dependencies and impacts on the natural environment so that adaptation solutions consider these elements.

How can Marsh help?

Marsh works directly with businesses to implement robust enterprise risk management strategies, including pollution prevention and avoidance, for example, to protect their balance sheets from activities that harm nature.

Marsh can identify potential impacts of climate change on your business strategy, such as resource availability or whether the provenance of key materials will be viable in the future (for example, will you be able to claim that something is made with 100% Italian ingredients?).

Did you know?

Taiwan’s electronics industry was badly disrupted after extreme heatwaves and drought hit in 2021. One large contract chipmaker spent over US$26 million on additional water trucks amidst drought conditions. Uncertainty around water supply has motivated several chip companies to leave Taiwan permanently (source: Marsh McLennan).

As climate change impacts worsen, governments and regulators may impose increasingly onerous requirements on businesses to report and reverse the impacts of climate change. Complying properly with these requirements can help your business demonstrate your commitments to key stakeholders and establish you as a preferred business to engage with.

How Marsh can help?

Marsh can work with you to understand which factors are important for your business, ranging from changing disclosure requirements (adaptation is increasingly in focus, and physical risks are already part of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations) to new policies (planning restrictions, legal liabilities), ensuring appropriate measures are taken so that you and your business are prepared.

Did you know?

More than 170 countries have national policies on adaptation to manage the risks of climate change impacts (source: The London School of Economics and Political Science).

The communities your business operates within (and that your employees are part of) may be significantly impacted by climate change events. It is important to understand how your business could be affected and to play an active role in adaptation for the broader community.

How can Marsh help?

Marsh’s adaptation and resilience recommendations keep communities in mind at every stage. One example is community-based catastrophe insurance (CBCI), which demonstrates how new flood insurance solutions can be designed to create risk-reduction incentives at community level.

Did you know?

The danger of flooding will be particularly severe in coastal areas, with many shoreline communities already facing an existential threat. By 2050, 570 coastal cities with a total population of more than 800 million people are expected to be impacted by sea level rise (source: Marsh McLennan).

Your capital providers (including insurers) are not immune to physical risks. The impact of climate change on their own businesses, and their regulatory and reporting requirements, may have knock-on impacts on your business.

How Marsh can help?

Marsh can help ensure you are best positioned to meet capital provider expectations. For example, we can mobilize your organization’s financial capital for flood resilience by standardizing co-benefit assessments and integrating them into environmental, social, and governance (ESG) and green finance frameworks. This also can be incentivized by strengthening the role of resilience ratings in awarding public and private contracts.

Did you know?

The more exposed your business is to perceived risks, the higher your insurance premiums are likely to be. Commercial wildfire premiums jumped 300% in California between 2018 and 2021 (source: Marsh McLennan).

Our services to help your business adapt

Examples of our impact

Context

The client is a global investor with +15,000 assets seeking to establish a standardised physical resilience and DD process.

Client Challenge

The client’s in-house climate team needed external technical support to, backed up by written reports to inform their own strategy and business mandatory reporting.

Solution

Marsh modelled the impact of different climate perils under a range of future trajectories through to the year 2100.
We scored the client’s portfolios covering multiple geographies and classes of risk (from property to pipelines).
Marsh provided recommendations to improve resilience on both a site and a portfolio level, alongside detailed cost benefit analysis to aid decision making.
We provided a bespoke ‘resilience playbook’ for the client’s asset managers, with asset type and peril specific vulnerabilities, primary/secondary risk factors, current/future asset-level resilience and options for embedding resilient design at the site (e.g. adaptation options)

Context

The client develops or invests in industrial, office, residential, and retail sites globally.

Client Challenge

The client needed to understand its climate risk in a particularly exposed region of the world to inform its divestment strategy, insurance program, and disclosure requirements.

Solution

Marsh modelled a detailed evolution of physical risks over the lifetime of the assets in question across different climate scenarios.
Leveraging the initial modelling results, Marsh re-ran the modelling assessment with adaptation-adjusted vulnerability functions.
Marsh provided recommendations on the most appropriate adaptation solutions with specific peril exposures in mind.

Context

The client is a critical part of national (and international) climate action plans through operating one of the largest solar parks in the world.

Client Challenge

The client needed to understand its physical risk exposure to ensure operational continuity and thereby meet its energy production commitments.

Solution

Marsh modelled the clients’ climate risks across its hardware, software, and emergency response systems.
Identifying heat stress as the primary risk, Marsh worked with the client to identify appropriate measures based on the size of the costs and benefits of those recommendations.
Marsh developed a practical adaptation implementation roadmap that the client was able to disclose to its external stakeholders.

Learn more about our work with this client here.

Context

The client is an international food producer.

Client Challenge

The client needed to understand the short- and long-term yield risks for its key crop exposures from its suppliers.

Solution

Marsh assessed the short-term supply risks of the crops by analyzing a current crop yield map and conducting scenario analysis for future yield trends to identify patterns.
Our team identified acute risks (river floods and earthquakes), provided real-time alerts, and estimated very high water stress in crop-growing areas, potentially making irrigation unfeasible or cost prohibitive.
Marsh provided recommendations that enabled the client to make strategic decisions about its supply chain.

Context

The client develops tower infrastructure solutions for operators in the Southeast Asian market.

Client Challenge

The client needed to understand the vulnerabilities of several of its critical infrastructure assets.

Solution

Marsh produced a customized risk score for each asset by considering the individual characteristics of the asset and modelling its vulnerability to location-based hazards.
Detailed risk projections were developed for each asset across six main perils and alternate scenarios.
Marsh created a resilience approach for each peril set, with various climate adaptation pathways organized by their impact and implementation timeline.

Why work with us

With Marsh, you get Marsh McLennan

Through our one-enterprise approach, we can tap into a wealth of expertise across risk, strategy, and people.
Oliver Wyman is the go-to partner for the UN’s climate initiatives; Mercer has deep expertise on people strategy and responsible investment; and Guy Carpenter’s catastrophe modelling tools are uniquely positioned to help you understand the impacts of potential climate scenarios on your business.

FAQs

Adaptation to climate change refers to the process of adjusting and responding to the impacts and risks associated with climate change. It involves taking proactive measures to reduce vulnerability and build resilience to the effects of climate change, with the goal of minimizing negative impacts and maximizing opportunities.

Source: MMC

As an Insurance Buyer, Risk Manager or Head of Sustainability, you may already be implementing adaptation measures, however, there may be opportunities to expand your existing processes into a more holistic strategy.

Some examples of things you could be doing if not doing already:

Fully assess the potential impacts of future weather events on both your own assets and within the wider system.
Consider appropriate system-wide as well as on an asset-level adaptation measures
Consider a full range of tools, from insurance through to nature-based solutions
Involve a full range of your business’s stakeholders, from finance (for Return-on-Investment (ROI) considerations) through to site management and operations

Sustainability officers typically have responsibility for target-setting and reporting, however, implementing a holistic business strategy plan often involves the whole organization, particularly when it comes to adaptation;

Risk managers are responsible for the risks facing their organization and procurement of insurance. They understand building resiliency, business continuity and how to respond to losses. Importantly, risk managers should be thinking about the availability of insurance in the future when the business could be exposed to more extreme weather.
Sustainability officers are usually responsible for a business’ overall sustainability strategy and decision making.
Finance managers will have a perspective on the economics of adaptation strategies, considering factors like return on investment and payback periods. This analysis helps businesses prioritize climate adaptation measures.
Operations staff are responsible for the day-to-day operations of a business site, often managing resources such as technologies, energy and water, as well as interacting with the local community and surroundings of an organization. Their activities may need to change with changing weather patterns.
Supply chain managers are responsible for managing the flow of goods and services within a business. They need to understand the climate risks and vulnerabilities within the supply chain, identify ways to mitigate these risks, and promote sustainable and resilient practices among suppliers.
Communications and Public Relations staff develop internal and external strategies to raise awareness about the business's climate adaptation efforts, engage stakeholders, and enhance the organisation's reputation as a responsible and resilient entity.

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Adapting to climate risks

How should I think about adaptation, and how can Marsh help?

Marsh Adaptation Framework

Explore the framework further through our interactive infographic below:

Protection from risks

Enhanced opportunities

Broader collaboration

Physical assets, operations and people, and emergency response

1. How can I protect my assets from climate-related physical damage?

How can Marsh help?

Did you know?

2. How do my operations (employees, processes) need to change in the context of a changing climate?

How can Marsh help?

Did you know?

3. How does my disaster response need to change in the context of a changing climate? How can I ensure business continuity?

How can Marsh help?

Did you know?

Suppliers, customers, critical infrastructure, resources and ecosystem services, governments and regulators, capital providers, and communities

4. How could my suppliers be impacted by climate (and other risks)?

How can Marsh help?

Did you know?

5. How are my customers impacted by climate change?

How can Marsh help?

Did you know?

6. How could critical infrastructure (roads, waterways, energy utilities) that my business depends on be impacted by climate change?

How can Marsh help?

Did you know?

7. How can water, nature and other ecosystem services that my business depends on be impacted by climate change?

How can Marsh help?

Did you know?

8. How could future policy, legal, or social factors present risks or opportunities to my business?

How Marsh can help?

Did you know?

9. How could the local communities I interact with be impacted by climate change, what is my role?

How can Marsh help?

Did you know?

10. How could capital providers (including insurers) be impacted by climate change, and what does that mean for me?

How Marsh can help?

Did you know?

Our services to help your business adapt

Risk Engineering

Supply Chain Optimization

Risk Transfer and Placement Strategy

Climate Risk Finance Optimization

Alternative Risk Transfer (ART)

Climate Risk Modelling

Resilience Assessments

Enterprise Risk Management (ERM)

Climate Reporting & Disclosures

Examples of our impact

United Kingdom Investment Manager

Context

Client Challenge

Solution

North American Real Estate Company

Context

Client Challenge

Solution

Middle Eastern Utilities Company

Context

Client Challenge

Solution

European Food and Beverage Company

Context

Client Challenge

Solution

Southeast Asian Infrastructure Company

Context

Client Challenge

Solution

Why work with us

Physical climate risk expertise

Proximity to insurance

Operational resilience measures

With Marsh, you get Marsh McLennan

FAQs

What is adaptation?

How is adaptation different from what I already do?