The Technical Corner – Which climate scenario should a Resilience Manager use?

Abstract

Which climate scenario should aResilience Manageruse to assess the risks facing their organization? What do values such as +1.5 °C or +3 °C actually mean, and how reliable are the scenarios developed bythe IPCC,NGFS, andCopernicus? In this Technical Corner, we’ll analyze how to correctly interpret the main climate projections and, above all, how to translate them into operational tools for risk assessment, business impact analysis, investment evaluation, and business continuity planning. Because a climate scenario isn’t meant to predict the future, but to verify whether today’s decisions will still be valid in tomorrow’s climate.

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When discussing climate change, terms such as+1.5 °C,+2 °C,+3 °C,Net Zero,SSP,RCP, andCurrent Policies Scenariocome up constantly. For those working in the field of organizational resilience, it’s easy to feel overwhelmed.

The question, however, is much simpler: Which climate scenario should I use to assess the risks facing my organization?

Climate scenarios are not forecasts

The first misconception to clear up is that climate scenarios are not predictions of the future: no one can know exactly what the global average temperature will be in 2050 or 2100.

Scenarios, on the other hand, represent different assumptions about the evolution of emissions, energy policies, economic development, and technologies. They therefore serve to assess how resilient an organization is in the face of different futures. In other words, they do not seek to answer the question:“What will happen?”

But rather:“Would our organization still be resilient if this scenario were to occur?”

Where do these scenarios come from?

The world’s leading authority is theIPCC (Intergovernmental Panel on Climate Change), which uses scenarios known asShared Socioeconomic Pathways (SSPs).

These describe various possible trajectories for the development of the global economy, population, technology, climate policies, and greenhouse gas emissions.

These scenarios form the basis for the assessments used by governments, regulatory authorities, insurers, and large organizations to estimate the evolution of climate risks.

These are complemented by the scenarios developed by theNetwork for Greening the Financial System (NGFS), which are now widely used by the banking and financial sectors for climate stress tests, as well as those from theInternational Energy Agency (IEA), which analyze the evolution of the global energy system.

What do +1.5 °C or +3 °C really mean?

One of the most common misconceptions is the idea that a global average temperature increase of 1.5 °C simply means slightly warmer days.

In fact, these values reflect a change in the Earth’s entire climate system.

For many areas of Europe, and particularly for the Mediterranean basin, a global average increase of 1.5 °C could result in significantly higher local increases, with much more severe consequences in terms of heat waves, intense precipitation, droughts, and wildfires. It is therefore essential to distinguish betweenthe global average temperatureandlocal climate impacts, which are the factors that truly matter to an organization.

What is the most realistic scenario?

This is probably the most frequently asked question. The answer is thatthere is no single scenario.

For short-term operational decisions (5–10 years), it may be reasonable to use scenarios consistent with the climate policies currently in effect.

For investments intended to last for decades—such as new plants, data centers, automated warehouses, critical infrastructure, or large industrial facilities—it is advisable to also consider more severe scenarios.

A best practice is to compare at least three possible scenarios:

• A scenario of orderly transition, with effective climate policies and relatively low physical risks.
• An intermediate scenarioin which increasing physical risks coexist with economic and regulatory transformations.
• A high-emissions scenario, characterized by more frequent extreme weather events and much more significant physical impacts.

The goal is not to determine which scenario will unfold, but to assess how robust business decisions remain as the economic environment changes.

2024 Changed the Outlook

According to the European serviceCopernicus, 2024 was the first year in which the global average temperature exceeded the pre-industrial level by morethan 1.5 °C.

It is important to clarify that this does not mean we have already formally met the Paris Agreement’s target, which is assessed over much longer periods. However, it is an extremely significant sign. For the Resilience Manager, this means it is no longer prudent to plan for the future based solely on past climate data.

How to Use These Scenarios in Business Continuity

Climate scenarios are only valuable when they are translated into operational questions.

For example:

• Are the forecast temperatures compatible with the operation of the systems?
• Is the data center cooling system still adequate?
• AreRecovery Time Objectivesstill achievable during extreme events?
• Does theBusiness Impact Analysisalso take into account the effects of simultaneous weather events?
• Are critical suppliers exposed to the same risks?
• Does the insurance plan reflect the new level of exposure?

These questions represent the true link between climatology and business continuity.

Advice for the Resilience Manager

The value of climate scenarios does not lie in accurately predicting the future. It lies in determining whether the decisions made today will remain valid even in a different climate context. Ultimately, climate risk does not require us to guess what the climate will be like in 2050. It asks us to build organizations that are resilient enough to operate successfully whatever scenario the future may hold.

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