Risk teams urged to link KRIs to weather-exposed assets

Enterprise risk management teams are being urged to strengthen their organisations’ readiness for extreme weather events, according to research by Gartner.

“Extreme weather events now rank in the top 10 of Gartner’s quarterly emerging risk report, with global data showing they’re becoming more frequent and destructive,” said Alex Ossington, director of advisory in the Gartner Assurance Practice. “Yet this risk can be difficult to manage because an extreme weather event can be seen as a random occurrence, leading to a perception among organisations that it is harder to monitor and prepare for.”

Gartner advises that once risks are identified, ERM teams should assess, monitor and report findings to drive coordination and action. Developing key risk indicators is also essential. Gartner says these should be tied to strategic objectives and based on long-term data. Instead of general metrics like carbon emissions, indicators should reflect specific exposures, such as the value of assets in flood zones or production facilities in high-risk regions.

“Examples of meaningful KRIs include the volume of real estate collateral exposed to devaluation, the cost of past damages from extreme weather, or the proportion of production facilities in high-risk areas,” Ossington explained. “Perhaps the most vital role for ERM is to report actionable information to stakeholders and support the development of preliminary mitigation plans. This ensures that decision-makers are aware of both the organisation’s exposure to extreme weather risks and its appetite for taking on such risks.”

Gartner recommends providing reasonable estimates of potential financial impact to help quantify value at risk. These do not need to be exact but should enable direct comparisons with risk tolerance. Practical, low-regret actions are also encouraged, such as strengthening protections at individual sites or diversifying suppliers.



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