Climate risk is becoming a core business continuity issue

Climate risk is being pushed down board agendas as organisations grapple with economic pressure, disrupted supply chains and geopolitical instability.

At a Wellington discussion hosted by Marsh and the Institute of Directors, panellists warned that treating climate as tomorrow’s problem could leave businesses exposed. Boards need to test whether their organisations are prepared for a more interconnected and volatile operating environment.

Toni Ferrier CMInstD, CEO of Marsh New Zealand, said the pace and complexity of emerging risks mean boards can no longer rely on static risk registers or linear planning assumptions. 

The discussion drew on World Economic Forum’s Global Risks Report and Marsh’s Navigating Global Risks in the Pacific 2026.

Ferrier said boards are operating in an environment where risks are compounding rather than appearing in isolation. Climate risk is intersecting with broader operational, infrastructure and economic pressures.

She referred to a conversation with leaders of a primary sector business that is investing in agri-tech and transition initiatives, but is now facing tighter margins and increasing operational pressure.

The business view was: “It is challenging, but we need to balance the drive for short-term returns against long-term strategic outcomes. If we don’t keep investing in projects that help mitigate the impact of climate change, one day we may not be in business.”

Ferrier said organisations face a growing business continuity challenge: how to maintain a focus on, and investment in, long-term resilience and preparedness while managing immediate operational and economic pressures.

During strategic and business continuity planning, businesses should consider stress-testing operations, understanding infrastructure dependencies, mapping supply chain vulnerabilities and considering how multiple risks could interact at the same time. 

The Global Risks Report 2026 describes a world of compounding risks, where geopolitical shocks, infrastructure disruption, climate instability and technological acceleration create cascading impacts across systems.

Ferrier said directors should be asking how organisations can prepare for increasingly complex and interconnected climate impacts while continuing to manage immediate operational pressures.

“How can organisations continue preparing for the impacts of climate change and continue to build resilience while still dealing with these immediate risks?”

The discussion at the event also focused on whether boards fully understand the extent of their exposure to the impact of climate change. For example, a risk such as extreme weather events in the Global Risks Report includes not only the immediate impact on a business – including its assets, people, customers and financial outcomes – but also the second- and third-tier impacts on the infrastructure, utilities, logistics networks and suppliers it relies on.

Ferrier said some organisations are modelling risk exposures across tier one, tier two and tier three suppliers and assessing dependencies throughout their supply chains, while others are only beginning to consider these issues.

“It varies a lot,” she said, adding that the most mature organisations are doing this work regardless of reporting requirements because it is fundamentally about operational resilience and good business practice.

The Global Risks Report notes that disruptions to critical infrastructure, geoeconomic confrontation and supply chain instability are rising global concerns, alongside extreme weather events and AI-related risks.

The discussion also touched on changes to New Zealand’s climate reporting regime, including reduced thresholds and expanded ability for subsidiaries to rely on offshore disclosures.

Linda Clark MInstD, barrister, investigator and board director, said political and regulatory settings often reflect the signals business sends about priorities, costs and long-term investment horizons. 

Clark said resilience planning often struggles when risks unfold gradually, despite the consequences being potentially severe and long-lasting.

She said long-term infrastructure and resilience decisions require clearer ownership and more consistent commitment across political and commercial cycles.

For some organisations, customer and investor expectations will continue to influence voluntary disclosure and transition planning, regardless of minimum regulatory requirements.

Clark pointed to New Zealand’s fuel supply vulnerability as an example of a known long-term risk that lacked clear ownership and continuity of planning.

“It’s been obvious to anybody who wanted to look,” she said. “But it wasn’t owned, and it wasn’t planned for.”

The conversation also explored the relationship between AI, energy demand and systemic risk.

Ferrier said AI is increasingly acting as a risk multiplier across multiple categories, including cyber risk, misinformation, infrastructure demand and geopolitical instability.

“I see it as absolutely a multiplier of all of those risks,” she said. “How we embrace the productivity benefits AI promises while balancing the downside risks needs some serious thought.”

She added that many of these risks cannot be managed in isolation. As geopolitical fragmentation increases and multilateral cooperation weakens, organisations may need to build greater resilience at a local and enterprise level while still thinking globally about interconnected risk.

The discussion pointed to a broader shift in how boards think about resilience. Climate pressures are testing the systems organisations rely on to keep operating, from infrastructure and energy to technology, supply chains and long-term viability.