Identify Risk Events and their Impacts

“Now, let’s move on to the next tab – or the next sheet in the Excel workbook. In the ‘Risk evaluation’ sheet, Section 3 is about identifying the risks to your business. We do this by listing down the climate risk events, their causes, and their impact on the operational, management of the business. Take a look at the table. What else do you see?”

The group moved closer to the laptop and each observed the table.

“Each of the events is given a risk score.”

“This table also records the impact on the customers, employees, families, and children.”

“You both are correct. Each event is given a risk rating. This is done by selecting its likelihood and impact. Once you select the likelihood and the scale of its impact, the risk rating is automatically calculated. The minimum score is 1 and the maximum is 9. Any score below 2 is classified as low risk and colored green. Any score between 3 and 4 is classified as medium risk and colored yellow. Finally, any score above 6 is classified as high risk and colored red. The reason for calculating the risk rating is to understand the risks that need immediate attention and similarly, which risks can be planned for in a later stage. Lalima noticed that I’ve also included a column that records the impact on the customers, employees, families, and children. Any idea why I included that? Wouldn’t the impact on the particular business have sufficed”

Lalima pondered for a while as she gazed into the distance.

“Well, employees are essential to run a business, and their family and children are one of the key factors for their motivation. Then, of course, customers are the ultimate purchasers of the business’ service or product. So, does the took specifically mention them because any direct negative climate-induced impact on the customers, employees, families, and children will affect the business?”

“I’ve got the most intelligent bunch here. You are right. Usually, we only evaluate the risks from the perspective of business operations and management. However, just as we evaluated the risks to the value chain, we also need to walk through the impact that the climate event will have on the employees, their families and children, and customers.

Without employees, the business won’t function. If climate-induced events severely impact their family and children, the employees would not be motivated and satisfied – which impacts their work. Therefore, the employee’s and their family’s well-being is important for your successful business operations.

Finally, customers pay for the product or service, and thus, any negative impact on their end will impact the sales of the business. There’s more to this in the next section, but now that you understand this, Kishor can you fill in the risk identification section?”

Kishor began to fill in the risk identification table and shared it with the group.