Impacts of climate change can already be felt today. Recent climate projections anticipate a significant increase in the frequency and/or intensity of extreme weather events such as storms and floods as well as slow-onset changes, like sea level rise and desertification. These negative impacts of climate change pose a growing risk to the sustainable development of all countries in general, and to least developed countries in particular.
Despite current efforts for mitigation and adaptation, residual risk of adverse impacts of climate change remain. Risk can lead to economic and non-economic loss and damage. Managing risks in order to avert, minimize and address loss and damage is therefore key.
Which role does climate related Loss and Damage play in the international policy discourse?
The topic of growing risks from climate change is reflected in the international policy agendas of the Sendai Framework, as part of the United Nations International Strategy for Disaster Reduction (UNISDR) and the United Nations Framework Convention on Climate Change (UNFCCC). Under the UNFCCC, the topic of L&D has gained growing attention. In 2015, the Paris Agreement emphasised its importance by introducing L&D as standalone article.
“ Parties recognize the importance of averting, minimizing and addressing loss and damage associated with the adverse effects of climate change….”
ARTICLE 8 OF THE PARIS AGREEMENT
Why do we need a risk-based approach to avert, minimise and address Loss and Damage?
International agencies such as GIZ advocates a risk-based approach to manage L&D. By analysing risks and identifying suitable solutions on a technical level, this approach supports decision makers from the public and private sector in forward-looking planning.
To avert L&D, mitigating greenhouse gases and sustainable development at global level remain paramount. To minimise L&D, it combines a smart mix of instruments that are already applied in climate change adaptation and disaster risk reduction. These tools are complemented by more innovative adaptation tools, such as risk finance and transformational approaches to address L&D. These tools include risk insurance, social protection, human mobility, flexibility in decision making and adaptive management.
What is climate risk management (CRM)?
Comprehensive Climate Risk Management (CRM) is a systemic approach that seeks to anticipate, avoid, prevent, and finance risks as well as absorb remaining impacts from extreme weather events and slow onset changes. It thus builds on lessons learnt from climate change adaptation (CCA) and disaster risk reduction (DRR), embedded in a sustainable development framework.
Comprehensive climate risk management aims to reduce and address the negative consequences of climate change along the entire risk continuum: averting climate risks through the reduction of greenhouse gas emissions, minimising climate risks through adaptation and risk management to managing residual climate risks. Against this background, climate risks have to be continuously analysed, reduced, addressed and transferred. The concept of comprehensive climate risk management encompasses the following mutually reinforcing steps and should build on the participation of stakeholders from different sectors and scales:
Climate risk assessments build the foundation to analyse risks and to encompass their potential consequences for people, assets and ecosystems. The magnitude of adverse impacts by climate change depends largely on the global level of emissions in the coming years and decades. In order to keep climate change manageable mitigating greenhouse gas emissions is paramount.
How does CRM work and which steps does it include?
Climate risk assessment
Climate risk assessment builds the foundation for successful CRM. By identifying risk, assessing the magnitude of impacts on people, assets and ecosystems CRM shows possible options for action and answers the question: How we would respond?
The assessment guides how climate change and extreme weather events interact with socio-economic factors. The interaction of these factors determines the overall risk for the affected community. The assessment includes evaluating the magnitude of the expected impacts and identifying the costs and benefits of the most promising risk management options.
To identify the smartest mix of instruments, it is crucial to understand the organisational and economic ability of countries, communities and the private sector to adapt and respond to risk. These factors play an important role for identifying the right measures ensuring climate-resilient development pathways.
Comprehensive climate risk management builds on the strong participation of stakeholders from different sectors and scales. It proposes a set of instruments that enables stakeholders to take timely action for enhancing preparedness to climate-related extreme events and for strengthening overall resilience, including slow-onset events: Decision making and implementation
Based on the identified CRM measures and related costs, decision makers from the public and private sector are enabled to better prioritise, fund and implement options (How one respond?).
Monitoring and evaluating the implemented measures leads to continuous learning for future actions.
What are the main tools of CRM?
Mitigation and sustainable development
The magnitude of adverse impacts by climate change depends largely on the global emissions pathway in the coming years and decades. To keep climate change manageable, climate change mitigation is paramount. Hence, taking action to keep global warming well below 2° C compared to pre-industrial levels, as agreed to in the Paris Agreement, and to even limit it to 1,5° C, is an important step for managing climate-related risk.
Sustainable development at all levels includes using renewable energy or switching to low-carbon transportation and lifestyles. Sustainable development paths offer multiple co-benefits such as better air quality and energy access. Adaptation measures like afforestation and agro-forestry entail similar co-benefits.
Addressing L&D is another critical pillar of adaptation and comprehensive CRM.
Risk finance mechanisms such as climate risk insurance, contin¬gency funds and social protection schemes can foster resilience to climate change by spreading risks across different actors, geography and time.