What is a climate risk analysis?
A climate risk analysis assesses the potential impact of climate change on companies, infrastructures or regions. It distinguishes between physical risks (e.g. extreme weather, heat, water scarcity) and transitory risks (e.g. political, regulatory or market changes due to the transition to climate neutrality).
The aim is to identify vulnerable areas, develop suitable adaptation strategies and systematically integrate long-term risks into decision-making processes. This is often based on recognized climate scenarios such as the IPCC RCPs or the Copernicus Climate Impact Explorer.
For companies, climate risk analysis is increasingly becoming mandatory due to regulatory requirements (e.g. climate risk analysis & financial planning) and investor expectations. It is also part of the double materiality analysis according to ESRS.
The methodology is usually carried out in accordance with recognized standards such as ISO 14091 or the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
What climate risks are there?
Climate risks are divided into two main categories: physical risks and transitory risks. Both affect companies at a strategic, operational and financial level.
Physical risks
These risks arise directly from climate-related changes and extreme weather events such as
- Heat waves & droughts
- Heavy rain, floods, storms
- Sea level rise
- Changed vegetation & growing conditions
- Damage to infrastructure and supply chains
Differentiation: Acute risks (e.g. extreme weather) vs. chronic risks (e.g. gradual temperature changes).
Transitory risks
They arise from the transition to a CO₂-neutral economy, for example through
- New legislation (e.g. CO₂ pricing, EU taxonomy, CSDDD)
- Technological change & innovations
- Changes in consumer behavior
- Market distortions or loss of reputation
- Financing and insurance risks
Example: A company invests in new technologies to meet CO₂ requirements, but bears the risk that these technologies will not prevail on the market.
Many climate risk analyses also use the distinction between acute (short-term) and chronic risks (long-term trends such as changes in temperature or precipitation). This allows for a more targeted adaptation strategy.
Climate data & scenarios - the basis of the analysis
A well-founded climate risk analysis is based on reliable climate data - both historical and projected. In addition to local weather data and extreme weather statistics, standardized climate scenarios are essential for assessing future developments.
The IPCC scenarios with the so-called RCPs (Representative Concentration Pathways) and SSPs (Shared Socioeconomic Pathways) usually serve as a basis. They describe possible developments in emissions, temperature, extreme weather and socio-economic factors.
- RCPs: Various emission pathways that depict different climate futures (e.g. RCP2.6 for ambitious climate protection, RCP8.5 for business-as-usual).
- SSPs: Supplement the RCPs with socio-economic assumptions, e.g. population growth, technological development or political framework conditions.
It is good practice to consider several scenarios in parallel - such as a business-as-usual scenario(e.g. RCP8.5/SSP5) and a Paris-compatible scenario (e.g. SSP1-2.6) - in order to visualize the range of potential risks and opportunities. Depending on the sector and location, regional climate models (e.g. from Copernicus) may also be useful.
Tip: The selection of scenarios should always be documented transparently and reviewed regularly. You can find out more about interpretation here: Scenario planning for climate risks.
Methodology: This is how a climate risk analysis works
The climate risk analysis is carried out in several consecutive steps. The aim is to systematically record and evaluate risks and derive appropriate options for action. A common process, which is based on established concepts of climate risk and vulnerability analysis (CRVA) and is in line with international standards such as ISO 14091 ("Adaptation to climate change - Guidelines for vulnerability, impacts and risk assessment"), comprises the following steps:
- Context analysis: company locations, business models and supply chains are considered with regard to climate risks. External framework conditions such as regulatory requirements or industry trends are also included.
- Exposure assessment: Identification of which climatic stressors (e.g. heat, heavy rainfall, flooding) can affect the company or individual locations.
- Sensitivity assessment: Analysis of how strongly the company or the location under consideration reacts to the respective stressors (e.g. through production losses, supply bottlenecks, infrastructure damage).
- Determination of adaptive capacity: Assessment of which existing strategies, structures or systems already reduce risks (e.g. emergency plans, structural measures, redundant suppliers).
- Vulnerability assessment: Combination of exposure, sensitivity and adaptive capacity to determine vulnerability. The results are often visualized in risk matrices.
- Prioritization & action planning: Derivation and evaluation of fields of action and adaptation strategies, prioritization according to urgency, effectiveness and cost-effectiveness.
Data sources, level of detail and tools used vary depending on the type of company, sector and location. For many companies, a pragmatic approach is the best way to start - for example, via site scans, qualitative interviews and step-by-step in-depth analyses. Modern software solutions and GIS tools can support and automate the analysis.
Tip: Involving relevant specialist departments and stakeholders increases the quality of the analysis and facilitates the implementation of measures.
Best practice: own climate risk analysis in practice
What I do myself: To show that I not only advise on climate risk management, but also actively implement it, I present my own analysis below, carried out according to current standards.
- Initial situation: Hamburg location, small consulting company (SaaS + services). Analysis based on BMU guidelines, ISO 14091, EU taxonomy, CSRD.
- Top 3 risks: heavy rain, storm surge, power failure at HQ.
- Data basis & method: DWD regional data (RCP 4.5), Copernicus, own activity data, assessment using risk matrix.
- Economic impact: >80% of the total damage potential up to 2035 is attributable to these three risks.
- Measures & impact:
- Targeted prevention and resilience measures led to 65% risk reduction in just 24 months (mobile property protection, UPS upgrade, multi-region failover).
- Introduction of a shadow price of €160/t CO₂e for Scope 3 emissions to steer investments.
- Anchoring in the budget, annual monitoring, review and readjustment.
- Personal learning: "Even small companies benefit enormously from structured, data-based climate risk analysis. Transparency and consistent measures pay direct dividends in terms of resilience and better financing conditions."
Contact me for a climate risk and vulnerability analysis that goes beyond mere compliance.
Sustainability consultant for companies & start-ups
With over 10 years of experience in ESG and tech strategies, he supports companies in their entry into climate risk analysis.
About the person
FAQ - Frequently asked questions about climate risk analysis
Why are climate risk analyses now mandatory for companies?
The obligation arises from new EU regulations such as the CSRD, the EU Taxonomy and the CSDDD. These require companies to systematically record and assess physical climate risks (e.g. heat, heavy rainfall) and transitory risks (e.g. regulatory changes) in order to ensure resilience and sustainability.
What is a climate risk analysis?
A climate risk analysis assesses the potential impact of climate change on a company by examining physical risks (such as extreme weather) and transitory risks (such as regulatory changes). The aim is to identify vulnerabilities and develop adaptation strategies.
What types of climate risks are there?
There are two main categories:
- Physical risks: e.g. heat waves, heavy rainfall, sea level rise
- Transitory risks: e.g. new laws, technological change, changes in consumer behavior
What methodology is recommended for climate risk analysis?
The analysis often follows the KRVA methodology (climate risk and vulnerability analysis) according to DIN EN ISO 14091, which includes steps such as context analysis, exposure assessment, sensitivity assessment, adaptive capacity assessment, vulnerability assessment, prioritization and action planning.
What data and scenarios form the basis of the analysis?
The analysis is based on historical and projected climate data as well as recognized scenarios such as the IPCC RCPs and SSPs. It is advisable to consider several scenarios in parallel in order to map various possible developments.
What typical measures can companies take to adapt?
Measures include structural adaptations (e.g. heat protection), strategic resilience (e.g. supply chain diversification), use of early warning systems, integration into governance processes and cooperation with external partners.
What are the benefits of a climate risk analysis?
A climate risk analysis increases risk transparency, provides regulatory certainty, strengthens financial resilience, improves market position and promotes competitiveness through better adaptation and innovation.
For which companies is a climate risk analysis relevant?
Since the CSRD Directive, not only large corporations but also medium-sized companies have been obliged to systematically record and assess climate risks.
How can the climate risk analysis be integrated into existing management systems?
The analysis can be easily linked to existing systems such as ISO 14001 or EMAS and can also be combined with life cycle analyses (LCAs) in order to firmly anchor climate adaptation in the company.
Are there practical examples of successful climate risk analyses?
The Federal Environment Agency provides guidelines for conducting climate risk and vulnerability analyses according to the EU taxonomy: Conducting a robust climate risk and vulnerability analysis according to the EU taxonomy. This can serve as a template for other companies.
Success Story
OBI Selbstbaumöbel & Fiegenbaum Solutions
Launch of a new product line with individualized Facebook pixel
To enable OBI to get off to a successful start with the new DIY furniture product line, I used a customized pixel concept that led to the highest lead count and conversion rate of all paid measures.
