Management of long-term climate risks

The climate is changing. Within the century countries can expect increasing temperatures, changes in precipitation patters and more extreme weather events. These changes will have an effect on business, infrastructure and communication also in Finland. The consequences will however wary greatly between the regions and trades. Some climate risks and responses are presented here.

Jouko Heikkilä wrote in his blog entDSC_6856-HDR-Edit (1)ry (16.11.2015) about the emerging risks and their management. Climate change is one of the most topical and important emerging risk governments, organisations and individuals have to face. Climate change adaptation requires similar caution in decision-making as the other emergent risks. Adaptation strategies should strive for balancing the risks and opportunities over long time horizons and under deep uncertainty of the impacts i.e. adaptation strategies should be robust. Additionally, they should be flexible and modifiable if the circumstances change.

Preparing for climate risks is a complex management challenge and there is a need for new methods at all levels of decision-making. Different regions, industries and organisations face different challenges and some impacts may be positive to one region and negative to another. For instance, Northern touristic sites and agriculture may benefit from the rising temperature, whereas the Mediterranean resorts could be hit hard by increasing temperatures. In addition, some organisations inside a region fare better than the others partly due to recognising the impacts and preparing for them accordingly.

For creating and assessing adaptation strategies a method called Strategy Robustness Visualisation Method (SRVM) is developed. In SRVM, the decision context, decision criteria and adaptation strategies are created together with the stakeholders in a workshop setting. The method can be used to visualise and evaluate the vulnerability of alternative adaptation strategies and to show the key trade-offs between the strategies to decision-makers.

Organisations should consider the risks and opportunities of the changing climate regularly and modify their responses if needed. The impacts of climate change have complex direct and indirect implications. Thus, climate risks should not be an isolated entity and should be assessed and treated together with the other risks, such as market or technology risks. Climate related decision-making faces similar challenges as is evident in other risk management situations. These include valuation of risk and understanding the probability of impacts and scenarios. Risk management may eventually be unsuccessful irrespective of the effort put in it. In a lucky case unwanted impacts may be avoided also by chance.

Methods such as SRVM which combine the principles of multi-criteria decision-making, scenario analysis, robustness and adaptive management could be useful for organisations for assessing complex decision problems. We are convinced that using these methods increases the awareness of the possible impacts of climate risks and how the different adaptation measures answer to these risks in different scenarios. Because of the increased awareness, the organisations may develop entirely new set of responses to deal with the recognised vulnerabilities. These methods could also be used in other complex decision situations involving long timeframes, such as general investment decisions on infrastructure and as a complement to other decision support methods such as cost-benefit analysis.

Jyri Hanski, Tony Rosqvist, Helena Kortelainen

Further reading:

Securing the EU’s energy future – adapting our energy system to climate change http://www.topdad.eu/upl/files/120162

How will climate change affect tourism flows in Europe? – Adaptation options for beach and ski tourists assessed by ToPDAd models http://www.topdad.eu/upl/files/120164

Adaptation and resilience of the transport sector http://www.topdad.eu/upl/files/120163