1. Exercise Module 2a Assessing Climate Change Risks
Country, Date, Presenter

2. Objective The objective of this exercise is to:
Identify and describe the negative effects of climate change for the case company and locations where the supply chain may be concerned
Rate the anticipated probability and magnitude pertaining to the different negative effects for the company
Derive risk values that enable ranking the spectrum of risks for the company in a matrix
ToC - Module 2a Exercise

3. Guidance for Facilitators
Guidance for Facilitators – Climate change, impacts and effects on the business
Plan approx. 1 hour for the exercise
You need to bring the following materials:
Case company handouts
Pens & markers
Flipcharts
ToC - Module 2a Exercise

4. Step 1 Step 2 Step 3 Step 4 Identify neg. effects on the business
Assess probability
Assess magnitude
Derive risk value and develop risk matrix
ToC - Module 2a Exercise

5. Step 1 Step 2 Step 3 Step 4 Identify neg. effects on the business
Assess probability
Assess magnitude
Derive risk value and develop risk matrix
ToC - Module 2a Exercise

6. Introduction to STEP 1 – Identify neg. effects on the business
In STEP 1 of this exercise you will identify and describe the neg. effects on the business resulting from the impacts of the relevant climate phenomena.
Please state the negative effect together with the impact:
Destruction of machinery due to flooding
Reduction of worker productivity due to heat wave
Consider the results of the previous module; make sure that you also include potential future negative effects on the business that the company has not yet experienced
Describe the negative effects by detailing the location, the affected goods or services, or the impact area; moreover, define a timeframe for each effect
ToC - Module 2a Exercise

7. Step 1 Step 2 Step 3 Step 4 Identify neg. effects on the business
Assess probability
Assess magnitude
Derive risk value and develop risk matrix
ToC - Module 2a Exercise

8. Probability of negative effects on the business
Introduction to STEP 2 – Assess the probability of negative effects on the business
Past climate change phenomenon
Projected climate change phenomenon
STEP 2 of this exercise is about analyzing the probability of the risks to materialize for the company.
To determine the probability, see how often the climate phenomena and resulting impacts have occurred historically. On this basis, estimate when and how often they might reoccur; keep in mind the validity of data.
Build your own probability scale and apply it consistently; values will only be indicative
Impact
Probability of negative effects on the business
ToC - Module 2a Exercise

9. Introduction to STEP 2 – Assess the probability of negative effects on the business
a) The occurrence of the negative effect on the business is not very likely
b) It has not occurred in the past and is not expected to occur in the next 1-2 years
c) Once the related climate phenomenon occurs, the negative effect on the business does not follow directly
Probability of 3
a) The occurrence of the negative effect on the business is deemed possible
b) It has occurred in the past and /or it is expected to occur but not in the next 1-2 years
c) Once the related climate phenomenon occurs, the negative effect on the business follows with only little delay
Probability of 5
a) The occurrence of the negative effect on the business is deemed very likely
b) It has occurred in the past and/or it is expected to occur in the next 1-2 years
c) Once the related climate phenomenon occurs, the negative effect on the business follows directly and immediately after
Deduct probability from statements of the following type:
For example, flooding that damaged company machinery and led to interruption occurred on average once every 5 years over the course of the past 50 years. Yet in the past 10 years there have been 3 floods of this type.
Scientist project that the frequency of heavy rain events that cause the floods will increase by 30 % over the next 20 years.
ToC - Module 2a Exercise

10. Step 1 Step 2 Step 3 Step 4 Identify neg. effects on the business
Assess probability
Assess magnitude
Derive risk value and develop risk matrix
ToC - Module 2a Exercise

11. Introduction to STEP 3 – Assess magnitude of negative effects on the business
a) Negative effect on the business occurs but its effect on the bottom line is limited
b) Production processes and/or value chain are not interrupted
c) Stakeholder relations are not affected
Magnitude of 3:
a) Negative effect on the business occurs and has a significant effect on the bottom line, endangering its growth potential
b) Production processes or value chain are interrupted
c) Stakeholder relations are affected and necessitate countermeasures
Magnitude of 5:
a) Negative effect on the business occurs and endangers the survival of the company
b) Production processes and value chain are interrupted
c) Stakeholder relations are endangered and the license to operate is in question
STEP 3 of this exercise is about assessing the negative effects that the company may has to incur on its business.
Although the damage is not specified in monetary terms in this step, defining the magnitude should be informed by economic considerations.
It should be taken into account what impact the damage of a particular risk has on the case bottom line.
The highest magnitude score should only be given if a risk has the potential to threaten the survival of the business
Negative effect on the business of 1:
a) Loss or damage occurs but its effect on the bottom line is limited
b) Production processes and/or value chain are not interrupted
c) Stakeholder relations are not affected
Negative effect on the business of 3:
a) Loss or damage occurs and has a significant effect on the bottom line, endangering its growth potential
b) Production processes or value chain are interrupted
c) Stakeholder relations are affected and necessitate countermeasures
Negative effect on the business of 5:
a) Loss or damage occurs and endangers the survival of the company
b) Production processes and value chain are interrupted
c) Stakeholder relations are endangered and the license to operate is in question
ToC - Module 2a Exercise

12. Step 1 Step 2 Step 3 Step 4 Identify neg. effects on the business
Assess probability
Assess magnitude
Derive risk value and develop risk matrix
ToC - Module 2a Exercise

13. Introduction to STEP 4 – Derive risk value and develop risk matrix
STEP 4 of this exercise is about deriving the risk value for each risk and inserting it into a risk matrix to allow for a prioritization of the risks the company faces.
Risks can be quantified, and hence prioritized
Derive the risk value by multiplying the probability of the negative effects on the business with its expected magnitude
Subsequently, insert the resulting risk values into the risk matrix.
ToC - Module 2a Exercise

14. Guidance for Participants – Derive risk value and develop risk matrix
For this task you should
Join your consultant group
Define the risk, assess probability and magnitude and damage, derive the risk value an then insert it in the risk matrix
Write the risk values for each risk on the corresponding risk card; also fill them in the Excel
Put the risk cards on the risk matrix meta plan
You have 60 min for this task
ToC - Module 2a Exercise

15. Guidance for Participants – Derive risk value and develop risk matrix
Impacts of Climate Change Phenomenon
Identified negative effects
More frequent and stronger flooding
Spoilage of fruits due to flooding / P: 2 / M: 2 /
Risk value: 4
Landslides
Destruction of buildings due to landslides / P: 4 / M: 3
Risk value: 12
Vector-borne diseases
Absenteeism of workers due to vectorborne diseases / P: 1 / M: 4
Risk value: 4
ToC - Module 2a Exercise

16. Discussion – Comparing results
This exercise is about presenting the results to your peers and discussing how this is relevant for any real climate change adaptation assessment.
After presenting the results discuss the following questions:
Do you think that this methodology is sufficiently precise to identify the central risks of a company?
What could be challenges in applying this step to a real company?
ToC - Module 2a Exercise

17. Thank you for your attention!
Company Trainer 1 Telephone number address Homepage
Company
Trainer 2 Telephone number address
Homepage
Knowledge partner
ToC - Module 2a Exercise