Guiding Question: What additional risk mitigation and risk and opportunity management actions should we consider?
Organisations should incorporate nature-related risks and opportunities into the existing risk and opportunity taxonomy and inventory used by the organisation. This includes mapping nature-related risks to existing risk categories and types, referring to the TNFD risk and opportunity register as a useful resource. (Aligned with Step 3 of TCFD).
The TNFD recommends that nature-related risks and opportunities are integrated into existing enterprise or portfolio risk management processes using the categories or sub-categories already in use by the organisation to manage other types of risks. Commonly used risk categories include financial, operational and strategic. However, most organisations also have additional risk categories. The table below shows examples of nature-related risks for each of these common categories.Additional Content
Aligned with TCFD, integrating nature-related risks and opportunities into existing processes involves determining whether such risks will be treated as:
- stand-alone risks and opportunities;
- cross-cutting drivers of existing risks and opportunities; or
- a combination of both.
Once determined, the organisation can appropriately incorporate the nature-related risks and opportunities into the company’s risk and opportunity taxonomy. A comprehensive risk and opportunity register should consider the interconnections with other environmental and social risks, such as climate, as well as contribution to systemic risks.
Considering interconnections with other risks, in particular climate and social risks
An organisation’s risk and opportunity assessment, management and decision-making should consider the interconnections with other types of environmental and social risks and the organisation should prioritise business responses that manage multiple risks.
In particular, the TNFD recommends that assessments of nature-related risks should recognise the connections and feedback loops with climate-related risks (e.g. risks associated with increased temperatures, droughts or floods that are increased by nature loss). When identifying and assessing nature-related risks and opportunities, organisations should refer to the TCFD framework and connect their nature-related risk and opportunity assessment to their climate-related risk assessment to understand synergies, trade-offs and mutually reinforcing risks and opportunities.
The TNFD also recommends that organisations consider not only the nature-related risks and opportunities arising directly from business impacts on nature, positive or negative, that affect the business’ own dependencies, but also the risks and opportunities that arise as a consequence of the impacts on society. Nature provides vital ecosystem services that businesses, economies and societies rely on, such as the provision of clean water, clean air and the reduction of carbon from the atmosphere).
Considering contributions to nature-related systemic risks
Addressing nature-related risks and harnessing nature-related opportunities, particularly through strategic transformation and circular economy models, can influence the drivers of nature loss globally and contribute to reducing systemic risks. Where possible, organisations should consider connections between physical and transition risks, and possible systemic risks. They should consider both their exposure to systemic risk and how their operations contribute to the reduction and management of systemic risk. When performing the prioritisation and assessment of risks and opportunities, organisations should consider whether, and the extent to which, the risk or opportunity affects progress on environmental priorities at a systemic level, including at the global scale of the Sustainable Development Goals, safe operating spaces within planetary boundaries, and the global targets of the Convention on Biological Diversity’s Global Biodiversity Framework.
Once an organisation has determined how nature-related risks and opportunities fit into the risk and opportunity taxonomy and risk and opportunity categories, it should consider updating its risk and opportunity inventory, which may include possible risk responses and assign a risk owner. Refer to TCFD for further details.
Useful Tools and Platforms
The following tools and platforms have been carefully selected by the TNFD to help support you in completing this phase of the LEAP process.