Climate Risk Assessment (CRA) involves identifying, assessing and responding to the physical and transition risks and opportunities related to climate to build a more enterprise. It ensures that organizations understand how climate change and the transition to a low-carbon economy can affect their assets, operations and corporate strategy. These include acute physical risks (such as extreme weather events), chronic physical risks (such as changing precipitation patterns), as well as transition risks and opportunities from changing regulations, technological shifts, reputational effects and evolving market dynamics.

Through comprehensive climate risk assessments, companies can make informed decisions that reduce risk and unlock opportunity. KPMG helps clients turn climate risks into strategic value — enhancing resilience, strengthening supply chains and supporting long-term value creation.

Managing climate risk is no longer optional. It is a pressing need for long-term business resilience. The consequences of inaction are increasingly tangible — from damaged infrastructure to disrupted logistics, from reputational damage to lost investor confidence. Regulatory developments like the European Corporate Sustainability Reporting Directive (CSRD) and the Swiss Climate Ordinance are also making disclosure and action mandatory. That’s why companies must embed climate considerations into governance, risk frameworks and strategic planning.

A strong climate risk management approach includes a robust risk assessment across multiple climate scenarios (e.g. IPCC, IEA, etc.), actionable risk mitigation strategies and transparent reporting of the quantified impacts. We support corporates across the full spectrum, developing adaptation strategies based on industry best practices, leading climate data, and full compliance with international standards.

Julian Meitanis
Julian Meitanis

Director, Corporate Sustainability Services

KPMG Switzerland

Manfredi Fiorillo
Manfredi Fiorillo

Senior Manager, Sustainability & Climate Advisory

KPMG Switzerland

Tools and frameworks for effective climate risk management

Organizations face a growing need to measure and respond to climate-related financial risks. We leverage advanced tools and risk models to assess and mitigate these risks. Our Integrated Assessment Models (IAMs) allow clients to explore various physical and transition scenarios in a consistent manner, combining multiple domains: climate hazards, economic drivers, energy sector trends, policy developments, demographics and more. These IAM allow us to stress-test corporate’s financials across a range of potential futures.

Artificial intelligence and data analytics improve our ability to assess local climate hazard exposures and simulate future disruptions. These tools are complemented by decision support systems that integrate climate risk data into procurement, operations and investment planning.

Nature-based solutions also play a key role. These are practical, sustainable methods for adapting to climate threats — such as restoring wetlands to reduce flood risk or planting green infrastructure to manage heat waves. These measures support both climate change adaptation and biodiversity.

Best practices for integrating climate risk into business include:

  • Align climate risk assessments with own enterprise risk management (ERM)

  • Embed climate risk into governance and capital allocation processes

  • Improve climate literacy across the organization

Through our leading alliances in the area, companies can gain a holistic view of both physical and transition risks. This enables integrated, data-driven and actionable climate risk assessments, backed by our extensive expertise in the field.

Our work supports compliance with global standards such as:

  • TCFD (Task Force on Climate-related Financial Disclosures)

  • ISSB (International Sustainability Standards Board)

  • ESRS 2 and E1-9 from the CSRD (Corporate Sustainability Reporting Directive)

  • IFRS S2 from the ISSB (International Sustainability Standards Board)

  • California CCDA (Climate Corporate Data Accountability Act) – SB253

  • SEC Climate Disclosures (U.S. Securities and Exchange Commission)

Managing physical and transition risks

Assessing and quantifying climate-related impacts goes hand in hand with the CSRD’s double materiality assessment approach, with a focus on financial materiality. The intent is to ensure that corporates have assessed (and feature processes to keep assessing) these effects on a regular basis. This will benefit the stability of the financial system in its entirety.

Physical risks can provide direct property damages to own assets (buildings, inventory, equipment) as well as generating operations and supply chain disruptions. These can generate significant business interruption (BI) losses, regardless of the insurance coverage. Physical risks also extend to local communities and can lead to long-term losses in productivity (in the case of elevated average temperatures) or even more direct social effects (in the case of water scarcity and consequent food insecurity).

It is therefore imperative to assess such impacts across the value chain (upstream, downstream and own operations) using leading climate data and solutions to help understand current and future vulnerabilities.

Transition risks and opportunities (RO), on the other hand, result from the global shift to a low-carbon economy. These include policy changes (like carbon pricing), technology disruptions, shifts in market demand and reputational aspects. Transition RO analysis can uncover elements as stranded assets, valuation and brand value impacts, or even exposures to rising energy costs.

Our leading regulatory teams (driven by our strong Audit practice) as well as our financial valuation, climate and nature experts, and sector experts, enable KPMG to offer best-in-class assessments of such drivers. Through scenario analysis, we can help stay ahead of regulatory trends, extreme weather and changing customer expectations, adapting strategy and investments to align with emerging climate-related effects.

Our approach emphasizes proactive climate change adaptation. Rather than reacting to disruption, we help businesses anticipate and plan for it. This includes integrating climate considerations into own supply chain strategy, business model, capital investments and enterprise risk management.

Implementing comprehensive climate risk management strategies

Building climate resilience means going beyond identifying risks. It means embedding climate considerations into every level of the organization.

The process typically includes:

  • Qualitative risk assessment

    Identify and evaluate climate-related risks across the value chain across a series of reference climate scenarios (scenario analysis) and up to a 2100 or 2050 time horizon.

  • Financial quantification

    Model different climate futures and estimate financial and operational risks.

  • Resilience strategy

    Reinforce adaptation measures and identification processes to maintain future value creation (mitigation planning for risk reduction).

  • Reporting

    Align with leading sustainability standards and frameworks to transparently disclose the identified risks and responses.

Ongoing monitoring and a clear feedback loops are not just recommended, they are critical in climate risk management. Our clients continuously update risk data, adjust strategies based on evolving threats, and measure the ROI of their risk reduction investments. This continuous improvement approach ensures that companies are always prepared for the changing climate risk landscape.

The business case for climate risk management

Climate risk management delivers significant business value in multiple ways. It enables cost savings through risk reductions, lowering carbon tax exposures, increasing energy efficiency, (and more) while supporting access to green capital and favorable insurance conditions. It improves ESG ratings and stakeholder trust. It prepares companies for future climate effects, markets drivers and policies, paving the way for a more sustainable and profitable future.

Key benefits include:

  • Lower operational risk and supply chain disruption

  • Higher resilience to extreme weather events and chronic climate change

  • Improved brand value and stakeholder relations

  • Competitive advantage through long-term planning

  • Enhanced reputation and investor confidence

Climate risk assessments also help identify opportunities — for example, through the expansion into new markets via low-carbon products and services. First-movers in decarbonization and adaptation often see stronger mid- to long-term returns. This strongly links to Climate Transition Planning (CTP).

Future trends in climate risk management

The regulatory landscape is evolving rapidly but, regardless of the direction, climate-related drivers remain extremely material to most industries. In KPMG’s view, CROA (climate risk and opportunity assessments) are a “no regret” move, as an investment in resilience.

Firms that prepare early will be in a better position to manage compliance costs, avoid losses and penalties. 

The digital transformation is another complement to the equation. AI-powered tools and advanced analytics are making climate risk insights faster, more accurate and more actionable. This improves both forecasting and real-time decision-making through, for example, digital twin solutions.

Sector-specific approaches are also becoming evident. For example:

  • Agriculture faces food security threats from heat waves and water shortages, compromising yields and productivity.
  • Infrastructure projects must plan for rising sea levels, flash floods and increased temperatures.
  • Logistics must prepare for both hub and route disruptions, as well as emission reduction targets.
  • Financial services need to identify and model risks across asset classes to make informed decisions.

KPMG offers tailored support based on each industry's unique needs and maturity level.

FAQs about climate risk management

Risk reduction, improved resilience, regulatory compliance and strategic opportunity.

    Embed climate risk into procurement, ERM, capital planning and site operations.

        IAMs, AI-based analytics, climate models and leading sector publications as those of the UNEP FI. Multiple frameworks entail what best practice reporting means, amongst which the CSRD and TCFD.

            Our tested approach includes scoping, qualitative assessment, financial quantification, resilience strategy, reporting.

                  Physical risks stem from changes in the Earth’s climate system. Transition risks and opportuntiies come from the global transition to a low-carbon economy and include: market, technology, reputation and policy effects.

                      How KPMG can help with climate risk management

                      We offer end-to-end support on climate risk. We combine technical and strategic expertise to build comprehensive, climate-resilient strategies.

                      We’ve worked with companies to:

                      • Prepare TCFD and CSRD-compliant disclosures

                      • Model financial risks from climate scenarios across global multinationals

                      • Assess site-level exposure to specific climate hazards

                      • Identify practical and cost-effective mitigation strategies

                      • Define group-wide adaptation plans to boost own resilience

                      • Quantify the effects of climate on upstream / supply chain

                      • Supported clients across the Industrial, Food, Energy, Pharma, Health Care, Transport and Electronics sectors

                      • And more

                      Together, we help clients build risk resilience, respond to stakeholder needs and maintain value creation through improved long-term planning.

                      Let’s turn climate risks into opportunities. 

                      Contact us to get started

                      Your key contacts

                      Julian Meitanis
                      Julian Meitanis

                      Director, Corporate Sustainability Services

                      KPMG Switzerland

                      Manfredi Fiorillo
                      Manfredi Fiorillo

                      Senior Manager, Sustainability & Climate Advisory

                      KPMG Switzerland

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