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Risk & Resilience

The three 'trip factors' of climate risk

May 31, 2017

Companies need to spend more time thinking about how climate and environment are going to affect the financial performance of the company, said Lucy Nottingham, director of Marsh & McLennan's global risk center.

She discussed the three "trip factors" of environmental risk: the evolution of technology that arises in the transition to a clean economy; the impact of extreme weather effects and resource scarcity; and regulatory changes, such as carbon tax: "We can no longer just think about how the company impacts the environment, but what are climate and environmental risks going to do to the financial performance of the company in the short and long term?"

Metrics are crucial to measuring these impacts, she said, whether through ROI, earnings per share or margins, because it allows companies to understand sustainability and make decisions about environmental risks and the opportunities available.