Zurich’s Alison Martin highlights the price of climate change for CFOs at D.C. event
June 17, 2019
Zurich Insurance Group Chief Risk Officer Alison Martin had just 20 minutes to potentially change hearts and change minds about the risks of climate change.Considering her audience was a group of CFOs from some of the world’s largest organization, there was a lot at stake.
In her presentation, “Risk Management: The Price of Climate,” she outlined the two broad categories of climate change risk that businesses face: physical risk and transitional risk.
Martin was invited to speak June 11 at the Wall Street Journal CFO Network annual meeting in Washington, D.C., and she didn’t waste a moment of her time on stage. She made it clear from the start that organizations that refuse to address the risks of climate change are “sleepwalking into catastrophe.”
Transitional risks result from the extensive policy, legal, technology and market changes required to address mitigation and adaptation related to climate change.
Physical risks from climate change can be event-driven or longer-term shifts in climate patterns and may have financial implications for companies, such as direct damage to assets and indirect impacts from supply chain disruption. Companies’ financial performance may also be affected by changes in water availability, food security and extreme temperature changes.
“This is a really big risk, but also a massive opportunity,” she said.
Martin said that companies will have to choose whether to adapt to the risks of a changing climate or embrace the transitional risks of mitigating the effects of climate change. Either way, they should focus on building resilience to climate change risk. She noted that research from the Zurich Flood Resilience Alliance has shown that community-level resilience-building projects avoid, on average, five dollars of losses for every dollar spent up front.
The two-day Wall Street Journal event also featured key U.S. government officials, including Mick Mulvaney, White House acting Chief of Staff, John R. Bolton, assistant to the President for National Security Affairs, and Betsy Devos, U.S. Secretary of Education.
More information about climate change risk is available in a 2018 Zurich report, “Managing the impacts of climate change: risk management responses.”
In the video below, Martin explains what she hopes the CFOs took away from her talk and why it’s important to deliver the message of climate resilience to this group.