Like many people I enjoy a nice Summer's day. There is arguably nothing better than having a cool drink in hand (a G&T springs to mind) on a warm evening. However, this is something which we do not experience much of in the UK. Our weather can be famously described as temperate, with a significant amount of rainfall (historically when Wimbledon is on). The recent hot (an understatement?) weather is therefore uncharacteristic of our climate and should not be taken lightly. I say this weather should not be taken lightly because there is unquestionable evidence it is due to the climate crisis affecting our whole world as we speak and the gradual warming of our planet. I am not being sensationalist or overdramatic but am merely reasserting what most climate scientists are currently saying and have been saying for many years, this article from the BBC succinctly sums up the scientific consensus on this issue. According to the IPCC (Intergovernmental Panel on Climate Change) we are living in the hottest period for 125,000 years, which if that is not significant evidence of climate change then I really don’t know what is.
The effects of climate disasters on europe
In the UK this weather has had a considerable effect on national infrastructure as it struggles to cope with weather so uncharacteristically hot. I am mainly thinking about public transport, in particular trains which have caused many people delays and a reduced service on most major train providers. The other effect is of course on health as many people (especially the elderly but it can affect anyone) struggle to deal with weather so unfamiliar to them. We have also seen a number of fires breaking out across London, due to the incredibly dry scrubland, which have caused some concern across the Capital. However, what we are seeing in Europe is arguably a lot worse than what we are seeing here in the UK. The devastating wildfires currently affecting much of Southern Europe (with more than 30,000 forced to flee in France alone) shows that the climate crisis has very much begun, as highlighted in this article by the FT.
Why and how crisis management planning can help
Most financial service professionals (including institutional investors and Fiduciary/ Asset Managers) include climate risk as an integral part of risk management. However, we at Avida firmly believe that an organisation should also plan and prepare a comprehensive crisis management plan which should include climate disasters as a potential crisis affecting the business continuity of an organisation. Our thinking about crisis management has been influenced by the military adage of ‘no plan survives the first enemy contact’ which military commanders know all too well. Because no crisis is identical to the one you have planned for, there is a need to develop resilient adaptation to a crisis situation. This can be developed through scenario planning, war gaming and crisis management simulations, all of which are lessons also developed through military thinking. People react more effectively to crises once they have experienced a crisis (simulation) before. It makes them more resilient, because they build up intellectual ‘muscle memory’ that will help recognise a potential crisis and act effectively when a crisis occurs. An example of a particular climate disaster affecting institutional investors and their providers is a flood or wildfire affecting a large infrastructure investment. Having prepared for a crisis such as this will help mitigate the effect of such an event on an organisation.
One key lesson learned in managing crises is information gathering and interpreting the consequences and the impact of certain events. A specific challenge in managing the climate crisis is the collection of proper data and information which can be relied upon. For this reason, Avida International is organising a series of webinars with industry experts in order to help our institutional clients improve their understanding and in turn improve their decision making. Check out our latest webinar with Anna Mikulska from the Baker Institute here. We also had a fascinating webinar with Stephane Lamoine from Beam Earth who spoke about innovative climate technologies which can you read about here.
We at Avida have successfully been helping our clients to be better prepared for a crisis for over a decade. Please get in touch with either myself or my colleague Paul Boerboom to see how we can help you.