Climate Change Volume V, Issue 2 April 2006 Risk Alert A report for clients and colleagues of Marsh on risk-related topics Climate Change: Business Risks and Solutions Contents Introduction . 1 Climate Change Science . 2 Climate Change and Natural Disasters . 3 Climate Risks and Opportunities . 6 Regulatory Risks and Opportunities . 6 Shareholder Risks and Opportunities . 9 Litigation Risks. 11 Reputational Risks and Opportunities . 13 Competitiveness Risks and Opportunities . 13 Developing Climate Risk Management Strategies . 14 Corporate Preparedness . 16 Insurance Coverage Issues. 18 Overall Insurance Industry Impacts . 18 Environmental Insurance . 20 Property Insurance . 21 Directors and Officers Liability Insurance . 22 Weather Risk Management . 24 Renewable Energy Risks . 25 Carbon Trading. 28 Carbon-Trading Strategy. 29 Conclusion . 31 Web Sites of Interest . 32 Abbreviations and Acronyms in This Issue . 32 Acknowledgments . 33 Marsh publishes Risk Alert to keep its clients and colleagues informed on critical issues related to risk. For additional copies, please contact
[email protected]. This report is also available for download at http://www.marsh.com. Author: Tom Walsh Editor: Meike Olin, CPCU, CIC Production Manager: Christine Reilly Publisher: Timothy Mahoney Climate Change at Davos Introduction When world business and govern- Climate change—often referred to as “global warming”—is one of ment leaders gathered for the World the most significant emerging risks facing the world today, pre- Economic Forum in Davos, senting tremendous challenges to the environment, to the world Switzerland, in January 2006, climate change was high on the list of risk economy, and to individual businesses. It is also one of the most issues they discussed.