Data’s Key Role in Managing Climate Risk

Physical risks are the direct consequences of climate change, such as extreme weather events, rising sea levels and changing temperatures. With 2023 being the warmest year on record, we're already witnessing these risks play out, impacting our homes, infrastructure and health. They can lead to damaging effects like hurricanes reaching higher categories or wildfires burning larger areas. Transition risks involve the economic and financial changes we face as we move towards a low-carbon economy. This includes new regulations, market shifts, and technological advancements that can affect job markets and the cost of living. Understanding these risks is important because they have significant implications for our lives and the broader economy.

Data serves as the cornerstone of effective climate risk management. By collecting and analysing data, organisations can identify patterns, predict outcomes and develop strategies to mitigate risks. For example, weather forecasts rely on predictive analytics, which collects vast amounts of data from various sources like weather stations and satellites. This information helps businesses prepare for extreme weather events, allowing for better decision-making in the face of an unpredictable climate. Ultimately, leveraging data enables organisations to navigate climate risks more effectively.

In the realm of climate risk management, two broad skill categories emerge: analytical and interpretation skills and forecasting skills. Analytical skills involve understanding and interpreting historical climate data, which is foundational for discerning trends and predicting future conditions. Conversely, forecasting skills focus on anticipating future scenarios through climate modelling and scenario planning. This involves creating detailed predictions based on various inputs and understanding how to interpret these outputs to inform practical strategies. A combined approach ensures a comprehensive understanding of current vulnerabilities while preparing for future risks.