Financial Foundations Framework

We Can’t Afford to Ignore Climate Risk

Every municipality in the United States is subject to risk from disasters, whether environmental or man made. We are often drawn to stories of catastrophic disasters in high population regions, such as wildfires in California or hurricanes on the Gulf Coast, and this can make it seem as though only certain areas need to be concerned about risk. In fact, disasters are possible in every state, in every season, and with a range of impacts ranging from inconvenient to devastating.

As major disasters increase in frequency, the related financial risks are increasing, too. Ratings agencies, asset managers, and investors are all beginning to realize that disaster and climate risk equate to financial risk. Fortunately, this also means that financial resilience can be built through disaster resilience, and vice versa. This article introduces how the two are linked and what government finance officers can do to minimize financial risk from disasters.

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