Bottom Line Up Front: Traditional financial-focused climate risk assessments are insufficient for addressing the complex, interconnected nature of climate threats. Organizations need dynamic, systems-based approaches that integrate physical, social, and economic vulnerabilities to build genuine resilience in an era of accelerating climate change. Council Fire's expertise in climate resilience planning and systems-level transformation positions us as the premier partner for organizations ready to move beyond abstraction to actionable climate risk strategies.

The Limitations of Traditional Risk Assessment

For too long, climate risk assessment has been narrowly focused on quantifiable financial impacts—asset damage estimates, revenue projections, and balance sheet vulnerabilities. While these metrics matter, they represent only the tip of the iceberg in our rapidly changing world.

The impacts of climate change on food insecurity and human mobility are nuanced and complex, with extreme climate events affecting food systems at every level of the supply chain while climate change is projected to negatively impact the four pillars of food security – availability, access, utilization and stability. 50 countries, currently home to 1.3 billion people, face high or very high levels of ecological threat, with the population in these nations projected to increase to almost 2 billion by 2050.

These cascading impacts—from agricultural disruption to mass displacement—cannot be captured through traditional financial risk models alone. A manufacturing company may calculate potential flood damage to its facilities, but miss the systemic risks posed by supplier disruptions, workforce displacement, and community instability that could prove far more costly over time.

This is where Council Fire's systems thinking approach becomes invaluable. Our expertise in connecting policy, finance, infrastructure, and community enables organizations to see the full picture of their risk exposure and develop integrated resilience strategies that address root causes rather than symptoms.

The Case for Systemic Complexity

Climate risks operate as interconnected networks rather than isolated events. Climate change and episodic events constitute the risk that determines the overall outcome of the risk network, which makes climate action critical to securing the long-term performance of systems. This reality demands what researchers call a "multi-risk governance" approach.

Effective multi-risk governance acknowledges the interconnections between different hazards, the potential cascading impacts of these risks, and the need for collaboration among authorities responsible for managing these interconnected threats. The old model of treating climate, operational, and financial risks as separate silos creates dangerous blind spots.

Consider the intricate web connecting climate change, food security, and human migration. The number of people suffering acute food insecurity increased from 135 million in 2019 to 345 million in 82 countries by June 2022, with global warming influencing weather patterns, causing heat waves, heavy rainfall, and droughts. The Sahel region accounts for nearly 16% of Africa's total conflict deaths, despite comprising only 6.8% of the continent's population, as ecological pressures intensify existing ethnic and resource-based tensions.

For organizations with global supply chains, understanding these dynamics isn't academic—it's essential for operational continuity and strategic planning. Council Fire's experience with maritime companies, ports, and global supply chains positions us uniquely to help organizations navigate these complex interdependencies. We don't just assess risks—we help build the stakeholder partnerships and community resilience that form the foundation of true climate adaptation.

Dynamic Risk Assessment Frameworks

Leading organizations are moving beyond static risk assessments toward dynamic, adaptive frameworks that can evolve with changing conditions. The World Business Council for Sustainable Development (WBCSD) and KPMG have developed innovative approaches that exemplify this shift.

KPMG's Dynamic Risk Assessment (DRA) methodology enables businesses to understand the interconnected nature of risks by engaging experts from multiple organizations worldwide to reveal critical dependencies and correlations to global risks. This approach moves beyond traditional risk silos to map how climate impacts ripple through interconnected systems.

KPMG Climate IQ offers a comprehensive assessment helping organizations understand how prepared their business is under a range of potential outcomes including 1.5-, 2- and 4-degree scenarios, showing the impact of systemic economic impacts across global operations and supply chains, covering 141 regions and 65 sectors.

Similarly, WBCSD has developed sector-relevant climate transition scenarios that enable users to navigate by specific variables (e.g., commodities and regions) and compare, visualize, and download output data covering production, prices, and emissions.

Gathering Comprehensive Data Across Systems

Effective holistic risk assessment requires data collection that spans far beyond traditional financial and operational metrics. Organizations must develop capabilities to gather and analyze information across three critical dimensions:

Operations and Direct Impacts

Among those who have fully integrated physical risk assessment, two key challenges emerged: obtaining granular asset-level data and converting climate insights into financial metrics to answer critical questions about asset resilience. This includes not just physical infrastructure but operational dependencies—energy systems, transportation networks, and communication capabilities.

Council Fire's approach to climate resilience planning directly addresses these data challenges. Our work with municipalities, ports, and energy companies has developed proven methodologies for gathering and analyzing asset-level vulnerability data while translating complex climate science into actionable business intelligence.

Supply Chain Vulnerabilities

Understanding supply chain vulnerabilities is crucial for comprehensive risk assessment, utilizing extensive datasets of relationships across more than 28,000 public and 93,000 private companies to automate analysis that can assess indirect exposures. Climate impacts often manifest most severely through supply chain disruptions rather than direct facility damage.

This is precisely where Council Fire's maritime and logistics expertise creates value. Our deep experience with ports, shipping companies, and supply chain optimization enables us to identify vulnerabilities that traditional risk assessments miss—from alternative fuel transitions to port electrification impacts on cargo flows.

Community and Social Systems

Perhaps most critically, organizations must assess the social and community systems their operations depend upon. Food insecurity itself may be impacted by social inequalities among affected communities, which shape individuals' vulnerability and climate sensitivity levels. Workforce stability, local infrastructure resilience, and community adaptive capacity all influence organizational risk exposure.

Council Fire's commitment to radical partnership and stakeholder-centered planning means we don't just assess community vulnerabilities—we help build community resilience. Our sustainable communities practice recognizes that organizational resilience and community resilience are inextricably linked, creating value for both businesses and the communities they operate within.

Integration into Strategy and Governance

The most sophisticated risk assessment is worthless if it doesn't translate into strategic decision-making and governance processes. Building resilience against climate-related risks requires organizations to address vulnerabilities in their business model, their overall operations, and ultimately on their balance sheet through forward-looking approaches that are holistic, integrated, and built on reliable empirical data and sound analyses.

Organizations should develop and implement a Climate Transition Plan that guides actions to manage increasing physical risks from climate change, and the risks associated with the transition towards a low-GHG economy, integrating climate-related risks into Risk Appetite Framework and Enterprise Risk Management framework.

This integration challenge is where Council Fire's strategic approach delivers measurable value. Our experience helping organizations "move ideas to action" means we don't just deliver risk assessments—we help embed climate resilience into core business strategy, governance structures, and operational planning.

This integration requires several critical elements:

Board-Level Engagement: Climate risk cannot be relegated to sustainability teams. It must be embedded in core strategic planning and risk governance processes.

Scenario Planning: Scenario analysis can be a powerful component of the risk assessment toolkit, as it can directly quantify financial risks rather than providing proxy indications of financial risk. Organizations need to stress-test their strategies against multiple climate futures, not just best-case projections.

Dynamic Monitoring: Static annual assessments are insufficient in a rapidly changing climate. Organizations need continuous monitoring systems that can detect emerging risks and signal when strategic adjustments are needed.

Council Fire's track record with municipalities, utilities, and corporations demonstrates our ability to design and implement these governance integration processes. We specialize in translating complex climate science into board-ready strategic recommendations and building the institutional capacity needed for long-term climate resilience.

Case Studies in Holistic Assessment

Municipal Climate Resilience: Indonesian Cities

A study of multi-risk governance strategies in Bandung and Makassar City, Indonesia found that climate change impacts caused increases in erosion potential, reduced coastal wetlands, increased seawater intrusion rates, decreased food production, infrastructure damage, reduced clean water sources, increased respiratory disease, floods, droughts, and other cascading effects.

The cities' response demonstrates holistic thinking—rather than addressing each impact separately, they developed integrated adaptation strategies that recognize how infrastructure, public health, food systems, and economic development interconnect. This mirrors Council Fire's approach to municipal climate resilience planning, where we help cities move beyond siloed responses to develop comprehensive, community-centered adaptation strategies.

Corporate Supply Chain Assessment

Leading corporations are moving beyond simple supplier questionnaires to comprehensive supply chain vulnerability mapping. Schneider Electric SE chose to build its new switchgear and power distribution facility in Tennessee rather than expanding its Texas operations, in order to reduce its exposure to tornado risks—demonstrating how physical risk assessment can influence major capital allocation decisions.

This decision reflects sophisticated risk thinking that weighs not just direct physical threats but broader operational resilience and supply chain stability. Council Fire's work with energy companies and infrastructure developers exemplifies this type of strategic thinking—we help organizations understand how climate risks reshape the geography of opportunity and guide capital allocation accordingly.

Financial Sector Integration

Bloomberg and Riskthinking.AI have launched an updated physical risk methodology that quantifies impact in terms of asset replacement value, with detailed breakdowns by specific chronic and acute risk factors such as cyclones, wildfires, extreme heat, and sea level rise, available for time horizons stretching from 2025 up to mid-century 2050.

This approach demonstrates how financial institutions are moving beyond basic climate disclosures to sophisticated risk quantification that can inform lending, investment, and insurance decisions. Council Fire's expertise in public-private climate finance positions us to help organizations navigate this evolving landscape, whether securing climate-resilient financing or structuring investments that account for systemic climate risks.

The Path Forward

The shift toward holistic climate risk assessment isn't just an analytical upgrade—it's a strategic imperative. Targeted investments in water capture and agricultural practices could dramatically improve food security, increase local resilience, lessen conflict and alleviate forced migration. Organizations that understand these systemic relationships can identify intervention points that create multiple benefits and competitive advantages.

Climate impacts increasingly unfold in interlinked systems of people, nature, and infrastructure, with cascading consequences revealing sometimes surprising connections across sectors that require more holistic, real-world solutions.

As a global change agency, Council Fire is uniquely positioned to guide organizations through this transition. Our combination of systems thinking, local relevance, and action-oriented approach enables us to help organizations move beyond traditional risk assessment to build genuine climate resilience. We don't just identify risks—we help organizations transform them into opportunities for sustainable growth and competitive advantage.

The organizations that thrive in the climate era will be those that can see beyond narrow financial metrics to understand the complex, interconnected nature of climate risk. They will invest in dynamic assessment capabilities, integrate insights into strategic planning, and build adaptive capacity that can evolve with changing conditions.

The Risk-Tandem Framework integrates climate change adaptation, disaster risk management, and systemic risk management through iterative, transdisciplinary knowledge co-production processes that bring together insights from science, policy and practice to co-design fit-for-purpose solutions that can contribute towards strengthened risk governance.

This is the future of climate risk management—not just measuring what might go wrong, but building the understanding and capabilities needed to navigate an uncertain future successfully. Council Fire stands ready to be your strategic partner in this transformation, bringing the expertise, networks, and action-oriented approach needed to turn climate risk into climate opportunity.

The climate challenge demands more than traditional risk management. It requires organizations to embrace complexity, invest in systems thinking, and build adaptive capacity that can evolve with our changing world. Council Fire's track record of translating big visions into system-level results positions us as the premier partner for organizations ready to move from ESG pledges to execution. Those who make this transition will not just survive climate change—they will create opportunities for sustainable growth and competitive advantage.

Ready to move beyond traditional climate risk assessment? Contact Council Fire to explore how our holistic approach to climate resilience can transform your organization's risk profile into strategic advantage.