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3 Components of Physical Risk
3 Components of Physical Risk
Resources from the Carbone 4 Academy
Do you want to take action within your organization and assess the physical risks you face?
The Carbone 4 Academy presents the components of climate risk.
An organization's physical risk
By definition, an organization must take into account all external factors that could jeopardize its operations in the medium term. The reality of climate change means that it is now difficult for a company not to address these issues when developing its overall strategy. The concept of risk implies the presence of vulnerabilities within the company that are exposed to climate-related hazards.
Three elements make up an organization's physical risk:
Weather-related hazards
They can be characterized as external disturbances with a probability of occurrence and a frequency of intensity. These climate-related hazards have a direct impact on business operations. However, not all organizations are equally vulnerable to climate-related hazards. Depending on the location of a company’s operations, there are varying degrees of vulnerability to climate-related hazards.
The Exhibition
Within an organization, the entities or components on the front lines—and those most likely to suffer the most significant damage—are considered to be exposed to climate-related risks. This exposure will be quantified and clearly expressed in physical units to enable the company to more effectively mitigate the consequences of climate-related hazards.
Vulnerability
Within an organization, each entity will have a capacity for action that depends on its ability to effectively mobilize resources to carry out a given mission. Depending on the element exposed to climate hazards, it will be important to assess both its sensitivity and its adaptive capacity. In this context, an element’s vulnerability is therefore the intersection of its sensitivity, its adaptive capacity, and the climate hazard.
To learn more about the challenges businesses face in building resilience against physical risks, check out our training course: Climate Resilience of Businesses - The OCARA Method
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