What we talk about when we talk about climate risk

June 6, 2019

What we talk about when we talk about climate risk

Words like “climate risk” and “hazards” are often used interchangeably. It happens in both conversations and headlines, leading to misunderstandings, misinterpretations, and miscommunication. In fact, they are very distinct terms. But, what exactly do we mean when we talk about climate risks and hazards? And more so, what should we be talking about when we use these words?

Climate risk is the expected, annual socio-economic costs of a hazard defined by the annual probability of a hazard multiplied by the consequences of a hazard. The consequences of a hazard can be further broken down into the exposure, vulnerability and adaptive capacity of the affected people and/or systems.

A hazard is a physical event that may cause outcomes including loss of life, injury, and damage to property, infrastructure, environmental resources. Extreme rain events, hurricanes, droughts, heat waves and wildfires are all examples of climate hazards. They are characterized by their unpredictable nature and potential to shock society. As such, sea level rise (which is a constant, like erosion) is not actually a climate hazard but rather an outcome of climate change.

This brings us to another important aspect of identifying hazards: In order to assess climate risks, a hazard must be defined by a return period or occurrence probability. This is the annual probability that this hazard will occur.

Another commonly used term related to climate risk is exposure. Exposure refers to people, property, infrastructure and other assets that are located in hazard-prone areas and encompasses how they could be adversely affected by a hazard. It can be disclosed in terms of number of people affected, assets affected, the size of an area, etc.

Exposure is often mistakenly combined with vulnerability, but again these terms are very distinct. Vulnerability is the predisposition to be adversely affected by a hazard. Vulnerability may depend on a range of physical, social, and economic factors such as building materials, land use, and economic status. It is possible to be exposed but not vulnerable to climate risk, for example, by living in a floodplain but having sufficient means to modify building structure to mitigate potential loss. However, to be vulnerable to an extreme event, it is necessary to also be exposed.

Finally, the consequences of a climate hazard can be influenced by the adaptive capacity of exposed people and systems. Adaptive capacity is the combination of all the strengths, attributes, and resources available to an individual or community to respond to a hazard, e.g. early warning systems,awareness etc.

With so many terms all with specific, distinct meanings, it's no wonder they get mixed up! The bottom line for your company is the following questions:

Are you exposed to climate hazards?
Are you vulnerable to those hazards?
What are your adaptive capabilities?

At HazAtlas we have a team of world-class climate experts who are here to answers those questions for you, so you can understand your climate risk.

In short: A climate hazard is an unpredictable, but probable, physical event. Climate risk is the expected annual socio-economic costs [$/yr] of one or more hazards. ©

Definitions adapted from IPCC, ClimateChange 2014: Impacts, Adaptation, and Vulnerability, Contribution of WorkingGroup II to the Fifth Assessment Report of the Intergovernmental Panel onClimate Change (2014)