Risks Evaluation in German Construction Industries due to Climate Change; A Propeller for Economic Profitability

Abstract

This study aims to identify primary considerations for creating and implementing a climate change risk management strategy in organisations, with a particular focus on economic risks within Germany's construction industry. The study employs both qualitative and quantitative methods, relying on primary data from literature reviews. Data collection includes expert interviews and questionnaires, followed by risk forecasting using the Delphi method, scenario technique, Extrapolation, and data received from Monte Carlo simulation tools. The research highlights the necessity of extensive risk assessment and mitigation strategies, emphasising the importance of recognising climate change challenges and opportunities in terms of policies and trends.

An in-depth review of key drivers and expectations, focusing on climatic pathways, highlights the need for a detailed climate risk classification system and integration into existing Risk Frameworks. The development of a risk willingness plan aligned with climate risk principles is discussed, comparing various risk identification methods. The study advocates for the identification and mitigation of climate-related risks through optimised business processes using climate scenarios.

A case study illustrates a six-step risk evaluation approach for managing climate-related risks, particularly carbon emissions and mild winters in Germany, demonstrating the long-term benefits of proactive climate strategies, resilience, and potential economic profits derived from mitigating the identified risks.

Keywords: climate change, risk evaluation, construction industry, risk classification, risk appetite plan, scenario planning, mitigation strategies