The physical impacts of climate change are no longer a risk of the future. Instead they are impacting businesses right now – across the globe, across industries, and across all aspects of their operations.
Year on year, natural catastrophes are causing hundreds of billions in losses to businesses. In the first three quarters of 2024 alone, weather and climate-related disaster costs accounted for an estimated $264 billion, the ninth consecutive Q1-Q3 with at least $200 billion in weather/climate-related economic losses. 2024 is already the fifth consecutive year with over $100 billion in insured losses. The changing climate is making individual events more damaging, increasing their frequency, and exposing a wider range of geographies to climate disasters, while weather patterns such as rainfall and drought cycles are becoming more erratic.
Your organization is therefore likely increasingly exposed to climate risk: whether as a direct threat to your facilities, equipment and site access; as a threat to your access to resources, transport and utilities; or as a threat to your supply chains. Understanding exactly how and where you are exposed is essential – as is taking action to mitigate the potential impact on your business.
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The changing climate risk means that existing methods of understanding are outdated, likely leaving businesses exposed to unknown risks, and undervaluing the potential impact on the organization. Taking climate change into account should be a key part of any risk evaluation. So, too, should be a focus that expands beyond solely assets and facilities.
Sigma7 Risk Engineering breaks down climate risks into seven major climatic variables and more than 20 associated hazards, gradual and extreme. These hazards can generate various types of damage above certain thresholds. [Image: Sigma7 Paragon]
As the risk posed by climate and weather events becomes greater, companies are increasingly calling upon specialist providers that have an understanding of climate change built into their services. These services are the logical next step in risk engineering, using scientific data, greater sources of information, highly trained engineers and a sound methodology to create a risk survey and assessment that is at the cutting edge of the industry.
[image: Florida Fish and Wildlife]
One such advanced methodology is the OCARA (Operational Climate Adaptation and Resilience Assessment) method, a comprehensive framework designed to help businesses assess and enhance their resilience to climate risks. Unlike traditional risk engineering models, which often focus on immediate operational threats or singular asset vulnerabilities, OCARA takes a more expansive and forward-looking approach by integrating climate change scenarios directly into the risk evaluation process.
This framework is a three-step process, beginning with an in-depth analysis of a company’s current resilience and exposure to climate risks, not only on immediate hazards but also on systemic vulnerabilities across the entire value chain. The second step looks ahead, leveraging climate projections to assess how these risks will evolve over time. OCARA incorporates future climate models into its risk assessments, providing businesses with insights into the likelihood of future hazards, such as intensified storms, rising sea levels, or extreme temperature fluctuations. Finally, the framework guides companies in developing a tailored resilience and adaptation plan. This plan is built on the insights from the resilience and projection phases, ensuring that businesses not only understand their climate risks but also have actionable strategies in place to mitigate them.
OCARA serves as a theoretical framework for companies to begin understanding their full risk exposure to climate risks. Sigma7 has built upon these foundations to create a practical-focused, field-based methodology, with our pioneering approach positioning us at the forefront of climate risk assessments.
With several years of expertise in this field, we launched our first climate change risk surveys over two years ago in collaboration with key industry partners. Since then, we have continuously refined and enhanced our methodology to meet the evolving demands of our clients and the complex nature of climate-related risks.
Combining the scope of the OCARA methodology with a technical and engineering-led approach, our advanced risk analysis addresses the full spectrum of climate change hazards that can impact industries and their supply chains. Recognizing that these hazards can accumulate, we have developed an approach for organizations to evaluate their resilience to the multifaceted effects of climate change.
Our review goes beyond standard site assessments to encompass supply chains, access routes, working conditions, external utilities, and customer relationships, offering a comprehensive view of climate risks.
Sigma7 will not only consider potential impact on the location but will also assess the potential impact of climatic events on the supply chain, utilities and personnel [image: Sigma7 Paragon]
The assessments incorporate elements from natural hazard surveys, business continuity planning, and utility supply reliability evaluations under climate stress. By integrating the best practices from these areas, we create a holistic climate change survey that helps identify all potential hazards, including risks of delayed product delivery or diminished production output.
Our approach leverages multiple sources of data, including climate change forecasts from the IPCC, peer-reviewed scientific studies, Swiss Re hazard maps, and reliable local data sources, ensuring the most accurate and location-specific climate data for each assessment. The methodology is also aligned with the increasingly stringent regulatory requirements concerning climate-related risks.
Once we have understood your full risk exposure, we provide potential loss scenarios, technical expertise, and detailed recommendations to create a roadmap for building resilience through specific, targeted adaptations. This actionable response, developed in accordance with leading global frameworks, equips organizations with the tools to fully understand their resilience to climate impacts, protect their operations, and maintain business continuity in an increasingly unpredictable climate landscape.
Climate hazards are growing more extreme, more frequent, and more difficult to predict. From more intense hurricanes and tropical cyclones to increasingly damaging secondary perils, the need for businesses to plan for and mitigate the impact of weather events is more urgent than ever. At the same time, a changing climate, bringing shifting weather patterns and unusual climate behavior, makes understanding the risk to your organization more complex.
However, it is still possible to be prepared. Engage with experts at the forefront of climate change risk engineering, from pioneering audits and assessments to more holistic, comprehensive solutions that span across not just your assets and operations, but also your utilities, suppliers, and delivery.
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Introducing Sigma7. We are building a new kind of risk services platform to enhance value for the world’s most prominent and complex businesses. Our mission is to help organizations create competitive advantage through actionable risk insights and business outcomes. We work globally across risk domains, apply modern technologies, and integrate the services of respected specialist brands in risk services.
We provide executive-level attention from preeminent risk experts, connecting risk profiles to the organization’s strategy and tactical operations.
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