Business is unprepared for financial risks of climate – survey
London, 1 May: The majority of North American finance executives expect to modify their business models in response to climate change, but more than half say they are unprepared to cope with the financial risks from current weather conditions, a survey has revealed.

In a poll of 205 finance professionals from middle-market and Fortune 1,000 companies in the US and Canada, 82% said they may have to make changes to their business models over the long-term to cope with climate change and weather volatility.

And 51% said their companies are not well prepared to cope with day-to-day economic risks caused by weather, in a survey commissioned by Storm Exchange, a New York-based weather risk management firm, and the Chicago Mercantile Exchange (CME), which hosts the world’s largest platform for trading weather derivatives.

They said the energy industry was the only sector to have made a systematic attempt to measure the impact of weather on its profits, while only a quarter of agricultural and retail businesses had made the effort. Of those companies that had used weather hedging tools, 86% said they found them useful.

However, almost half of those surveyed said they did not think there were any cost-effective ways to manage weather risk.

Felix Carabello, director of alternative investments at CME Group, said: “We hope this survey will help businesses understand the value of hedging weather risk, and also that the market has resources available to them to manage their exposure.”