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Lead authors Alexander F. Christiansen and Bente Pretlove

Contributors Dick Bratcher, Elzbieta Bitner-Gregersen, Peter Friis-Hansen, Luca Garrè, Bradd Libby, Byron Quan Luna, Chris Urwin and Kjersti Aalbu. This initiative is a collaboration between DNV GL and Xyntéo, an advisory firm that works with global companies on projects that enable businesses to grow in a new way, fit for the climate, resource and demographic realities of the 21st century.

Suggested reference: DNV GL: Adaptation to a changing climate, Høvik, 2014. Photography:, DNV GL

Foreword from Henrik O. Madsen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A broader view. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Executive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 CLIMATE CHANGE AND ADAPTATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Climate change poses new risks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Time to adapt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 FOUR ELEMENTS OF ADAPTATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Taking a broader view of climate risks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Estimating risks and characterising uncertainty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Managing vulnerability and resilience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Collaborating for greater impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 VULNERABILITY AND RESILIENCE: CASE STUDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


How can we build more resilient industries?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Maritime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Case study - Tanker design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Case study - Water shortages and the Panama Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Oil & Gas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Case study - Offshore platforms in the North Sea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Electric power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Case study - Power systems and Superstorm Sandy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Cities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Case study - Flooding on Long Island in 2050 and 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 TOWARDS A RESILIENT FUTURE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94



MANAGING RISK, BUILDING TRUST DNV GL’S PAST, PRESENT AND FUTURE One hundred and fifty years ago, the world was in the midst of a profound transition. New technologies such as steam power, electricity and the telegraph led to an explosion in productivity and connectivity, reshaping the global economy in just a few short decades. Yet these shifts also introduced new risks to life, property and the environment and transformed the relationship between technology, business and society.


It was this context into which Det Norske Veritas and Germanischer Lloyd were born. These companies, which have now merged into DNV GL, took on the role of verifying that vessels were seaworthy during a time when the convergence of new technology and business models caused an unacceptable number of ship accidents. By managing the increasingly complex risks associated with the rapidly evolving maritime sector, classification societies built trust among shipping stakeholders, contributing to the birth of a new era in international trade. Today, as DNV GL celebrates our 150th anniversary and our first year as a united company, the world is at another inflection point. The technologies, systems and institutions that have driven the most prolonged period of growth in our civilisation’s history are being tested by the new demands of the 21st century. And once again, our ability to manage risk and build trust will help us enable the changes the world needs.

In order to rise to this challenge, we have been exploring six themes of strategic relevance to our new organisation. Some of the themes, such as climate change adaptation, have taken us into newer territory; others, such as the future of shipping, have seen us re-evaluate more familiar ground. I believe that all of them, however, are absolutely central to our efforts to empower our customers and society to become safer, smarter and greener. I hope that we can use the themes’ findings, as well as the momentum of 2014, to engage a wide range of stakeholders in a forward-leaning discussion about how to achieve our vision – global impact for a safe and sustainable future. I look forward to the journey ahead.

Henrik O. Madsen President and CEO, DNV GL Group





As DNV GL turns 150, we are exploring six ‘themes for the future’ – areas where we can leverage our history and expertise to translate our vision into impact. We selected these themes as part of our efforts to take a broader view of the relationship between technology, business and society. On these pages you will find short introductions to each theme. To find out more, join us at:



The future is not what it used to be. Rising global temperatures, diminishing natural resources and deepening inequality threaten everyone’s prospects, including those yet to be born. Yet alongside these new global challenges are new innovations, solutions and opportunities that make a safe and sustainable future possible: a world where nine billion people can thrive while living within the environmental limits of the planet. In this theme, we set a vision towards this future. We analyse the barriers to change and detail the concrete actions that governments, business and civil society must take together if the obstacles are to be overcome and the opportunities for safer, smarter and greener growth are to be seized.

Technology has always been an enabler of societal change and we can expect that it will play a pivotal role in our transition to a safe and sustainable future. Indeed, existing technology is already unlocking safer, smarter, greener solutions for powering our economy, transporting our goods, caring for our sick and feeding our growing population. But history shows that transformative technologies – from the automobile to the internet – can take decades to reach scale. And time is one resource we do not have. How can we accelerate the deployment and commercialisation of sustainable technologies while ensuring that they are introduced safely into society? In this theme, we investigate this question, analysing the barriers to technological uptake and providing insights from past and present technologies.


THE FUTURE OF SHIPPING Shipping is the lifeblood of our economy and the lowest-carbon mode of transport available to a world with ever-rising consumption. It therefore has a crucial part to play in a safe and sustainable future. But the industry faces a challenging climate: more intense public scrutiny of safety and security, tightening restrictions on environmental impacts and a revolution in digital technology. To meet these challenges, we have analysed six technology pathways that can help us achieve three ambitions for 2050: reduce the sector’s fatality rates 90 per cent and reduce fleet-wide CO2 emissions 60 per cent, all without increasing the costs of shipping.

ELECTRIFYING THE FUTURE Electricity has already revolutionised the way we power our operations, fuel our vehicles, and light and heat our buildings - and it will have an even bigger role to play in the decades to come. Many emerging technologies can provide cleaner, smarter, affordable and reliable energy. Floating offshore wind can provide emissions-free power at scale by 2050. And a suite of smart grid technologies will provide households and communities with leaner, more local power. In this theme, we take a closer look at these technologies, and examine the contributions they can make to providing low-carbon power to future generations.

ARCTIC: THE NEXT RISK FRONTIER The Arctic offers a preview of a new paradigm for business: harsher environments, higher public scrutiny and a greater need to engage with stakeholders. As industries enter the Arctic, understanding, communicating and managing risks will be essential both to earning social licence to operate and minimising the impacts of their activities. With such high stakes, the Arctic will be a defining frontier – not just of operations, but of safer, smarter, greener technologies and standards. The Arctic is rich with resources and dilemmas. And while there are no easy answers to these dilemmas, we must tackle questions about its development step by step, based on a common understanding of the risks. In this theme, we examine the complex Arctic risk picture and explore its implications for shipping, oil and gas, and oil spill response.

ADAPTATION TO A CHANGING CLIMATE Climate change mitigation remains essential for our work to build a safe and sustainable future. But the greenhouse gases that have accumulated in the atmosphere over the past century and a half have already set changes in motion. Infrastructure and communities around the world urgently need to adapt to a climate characterised by more frequent and more severe storms, droughts and floods. And given the interdependence between business and society, business has a strong interest and critical role to play in these efforts. In this theme we have been developing tools to help both businesses and communities adapt to this new risk reality: a web-based platform for sharing information and best practices; a risk-based framework to help decision-makers prioritise their adaptation investments; and a new protocol to equip leaders to measure and manage community resilience to climate change.



EXECUTIVE SUMMARY Heat waves and droughts, storms and flooding, rising sea levels, landslides and wildfires are the new risk reality of climate change. Reducing our carbon emissions remains necessary for a safe and sustainable future, but it is no longer sufficient. As a changing climate is inevitable, we must adapt.

make them more resilient in the face of an uncertain future.

From power grids to offshore platforms, from rural villages to large cities, our businesses and communities are highly exposed to climate hazards. For the maritime and energy sectors, for example, extreme weather events threaten companies’ supply chains and physical assets, including power plants, transmission lines, ships and offshore platforms. At the same time these sectors will be expected to provide better services, more safely and reliably. A harsher, more unpredictable climate may become the new norm, but prolonged power outages and maritime disasters should not.

Taking a broader view of climate risks In a globalised economy, business and society are becoming more complex and interdependent and an extreme weather event can bring down entire systems. Such systemic risk was seen in 2011, when floods in Thailand disrupted production of computer disk drives, with cascading consequences for manufacturers and suppliers around the world. Systems thinking is needed to capture the full landscape of risks and solutions.

Business and society need to reduce our vulnerability and become more resilient: able to anticipate, absorb, accommodate, and recover from hazardous events. Adaptation will mean not only physical engineering solutions such as the hardening of infrastructure, but also new design criteria, emergency planning, and wider changes to decision making processes to

Our approach to adaptation Our approach to adaptation encompasses four elements:

Estimating risks and characterising uncertainty A changing climate creates hazards that are difficult to predict, and this uncertainty presents a challenge to decision makers. Risk-based decision making can evaluate a range of possible solutions and DNV GL has developed a risk assessment framework, which takes into account climate hazards, vulnerabilities and losses. By quantifying risk in monetary terms, this framework creates a transparent basis for decision makers to find the most cost-effective portfolio of adaptation measures.


Managing vulnerability and resilience To reduce vulnerability and build resilience in business and society, we need a comprehensive risk management strategy. Building upon a risk assessment, this strategy should encompass leadership, flexibility, innovation, response, recovery and learning. Collaborating for greater impact In an interconnected system, collaboration is essential as all parties benefit from each other’s resilience. By working together, businesses and communities can coordinate their efforts in preparation, response and recovery to extreme events. Furthermore, collaboration can turn existing information into accessible knowledge, as experience and best practices can be shared across sectors and geographies. Five examples illustrate the range of impacts that climate change can have on business and society. žž Extreme waves are likely to become higher, posing risks to a number of industries, including maritime. Our study examines structural failure of tankers and gives recommendations for increasing hull strength.

žž T he Panama Canal could suffer from water shortages within decades due to climate change. Our cost-benefit analysis shows that an existing adaptation plan is already moving in the right direction to ensure the Canal's continued operation. žž E xtreme waves can damage oil and gas platforms. Our analysis suggests that future conditions may render existing rigs unsafe, according to present criteria. If so, decks should be raised and support jackets strengthened. žž W hen Superstorm Sandy hit New York in 2012, it caused unprecedented flooding. Our study shows that in the future, higher sea levels and higher temperatures would make the flooding even worse. žž S andy also severely damaged electrical infrastructure. Based on the same simulations of a future storm, we explore adaptations to reduce the impact of flooding and wind on electrical systems. Towards a resilient future Our goal at DNV GL is to help business and society to improve their adaptation strategies and become more resilient. We have created a web-based adaptation knowledge platform intended to raise awareness about adaptation and to share information between different stakeholders.







CLIMATE CHANGE POSES NEW RISKS The world is warming. Climate change can be seen in heatwaves and floods, in rising seas and fiercer storms. Even if we cut emissions of carbon dioxide, there will continue to be a growing array of hazards hitting both business and society for several decades to come.

A new risk reality According to the Intergovernmental Panel on Climate Change (IPCC) the world is warming rapidly. Climate change is expected to cause more frequent and severe heat waves and droughts, more intense storms and flooding, and higher sea levels (see Figure 1). These events are already affecting communities and infrastructure with losses to human life, livelihoods and assets across the globe. Although individual events cannot be firmly attributed to climate change, climate change does increase the probability of extreme weather.

To assess what may happen in the future, we need to understand the drivers of climate change. Carbon dioxide (CO2) and other greenhouse gas (GHG) emissions cause warming, and the changes in climate we can expect later this century will depend on how much we emit. Because of the CO2 already in the atmosphere, however, we are locked in to a certain amount of climate change over the next decades.

WEATHER AND CLIMATE Weather is the day-to-day state of the atmosphere. Climate refers to the statistical distribution of weather over much longer time periods. A common period over which to define climate is 30 years. It is difficult to clearly identify a change in climate over periods shorter than 20 to 30 years, due to the presence of natural variability – random fluctuations in the atmosphere and oceans.

November 2012 Superstorm Sandy hits US and Caribbean

May 2013 Tornadoes in Oklahoma, US May 2013 Drought in Panama November 2012 Extreme heatwave in Argentina

January 2012 Landslide and flooding in Brazil

Figure 1. Selected extreme weather events 2012-2013

May 2013 Flooding in Central Europe

January 2013 Extreme cold in China

November 2013 Typhoon Haiyan in the Philippines

January 2013 Heavy snowfall in Israel October 2012 Floods in Nigeria

February 2012 Devastating drought in Sahel

November 2012 Exceptional heat in Australia


Future carbon emissions To project future climate change, scientists start with a range of possible emission scenarios, allowing for different changes in population, technology and economic growth. In the recent Fifth Assessment Report, the IPCC uses four different possible futures called representative concentration pathways (RCPs). The highest emission pathway is RCP 8.5. The 8.5 stands for 8.5 watts per square metre of radiative forcing (a measure of the increase in Earth’s greenhouse effect, as more outgoing heat is trapped by CO2) in 2100. This pathway represents a future with rapid population growth and slow adoption of new technologies, resulting in CO2 concentrations in the atmosphere reaching 936 parts per million (ppm) in 2100 (Figure 2). The lowest is RCP 2.6 – resulting in 2.6 watts per square metre of radiative forcing in 2100. This scenario assumes that emissions peak in the early 21st century and then fall rapidly, taking the level

of CO2 to 421 ppm in 2100 – still a little higher than it is today. The driver of global warming is the total amount of CO2 and other greenhouse gases in the

Total CO2 emissions, in billions of tons of carbon per year


Historical RCP 8.5 RCP 6 RCP 4.5 RCP 2.6







0 1960








Figure 2. Future emissions under the four representative concentration pathways (Source: Adapted from Glen Peters/CICERO)

THE BATHTUB IN THE SKY The main driver of the rapid global warming that we see today is the level of CO2 in the atmosphere. Before the industrial revolution, the level was about 280 parts per million (ppm). By 2011 it had risen to about 393 ppm - higher than in the past 800,000 years at least (we are now around the 400 ppm level). The level of CO2 in the air behaves like the level of water in a bathtub. It flows in from the burning of fossil fuels and deforestation, as well as various natural sources such as decaying plants.

Absorption by oceans, soil and growing plants acts like the drain in the tub. In the centuries before the industrial revolution, the inflow of carbon was in balance with the outflow, so the amount of CO2 in the atmosphere stayed roughly constant. Since then we have opened up the tap. By 2011, human activities were adding more than 35 billion tonnes of CO2 to the atmosphere per year. Even though this is smaller than some natural flows such as plant growth and decay, it has upset the balance. Now the inflow is greater than the outflow, with the result that the level of CO2 keeps rising.


atmosphere, not the emission rate (see “The bathtub in the sky”). There is also some cooling effect from industrial emissions of aerosol particles. At present, emissions are taking us on a higher path even than RCP 8.5.

From the results of these models, the IPCC predicts that in 2100, global average temperatures will be higher than in the pre-industrial era by: žž 3.2 to 5.4°C if emissions are unmitigated (RCP 8.5) žž 0.9 to 2.3°C if there is very strong mitigation (RCP2.6)

Model of the earth's climate To estimate how these future emissions will affect the climate, scientists build computer models of the atmosphere, oceans and land. These models are based on established physics – for example how air and water move while held by gravity on a rotating planet, and how gases absorb and emit light and infrared radiation. In global climate models (GCMs) the atmosphere and ocean are sliced up into three-dimensional grids. A single number in a grid box represents a given property of the air or water, such as pressure or temperature. Neighbouring boxes affect one another, moving air and water around, generating weather. Climate models aim to predict the statistics of weather over decades and longer timescales.

The earth's carbon budget Many scientists have suggested that to limit the chance of catastrophic changes in the climate, we should avoid more than 2°C warming. That would imply reducing emissions quickly, and will require radical changes in technology, governance and value systems. To have a 66 per cent chance of meeting the 2°C target, models give a cumulative global CO2 emissions budget of around 3 trillion tonnes above pre-industrial levels. By 2011, we had already emitted nearly 2 trillion tonnes of CO2.


In: 9,1 billion tonnes per year

in the atmosphere

2011 average:

393 ppm

Preindustrial level:

271 ppm

400 300 200 100

Out: 5 billion tonnes per year

CO2 absorbed by plants & soils

CO2 absorbed by oceans

Adopted / inspired by: Graphic: Nigel Holmes/National Geographic. Sources: John Sterman, MIT; David Archer, University of Chicago; Global Carbon Project




Climate risks for business and society Climate change and extreme weather events bring a host of risks to business and society. Super-typhoon Haiyan killed several thousand people in the Philippines in 2013, while Superstorm Sandy, which hit the US East Coast in 2012, caused an estimated USD 65 billion in economic losses to residents and the owners of businesses and infrastructure. Climate hazards can create risks that are systemic in nature hitting business and society across national borders. One of the most serious human consequences of climate change is famine. This can be caused by droughts, floods, or shifting monsoons and other weather patterns which mean the rain arrives at the wrong time of year for farmers and ecosystems. Food and water shortage is likely to lead to mass human migration, as we have seen for example in East Africa in 2011 when hundreds of thousands fled Somalia. Migration may in turn lead to wars and

other conflicts, often worsening the famine. Scarcity of food and water itself can increase the likelihood of conflicts. Warming will also aid the spread of vector-borne diseases. The temperature affects how insects move to new geographical areas, how parasites mature and reproduce, and the likelihood of being infected. Malaria, tick-borne diseases and dengue fever will probably become more widespread. Meanwhile the rise in sea level is already hitting low-lying coastal communities, especially in poorer regions of the world that are less able to build defences. Ports and other coastal facilities will also be affected by sea-level rise, especially as it may combine with higher storm surges from more intense tropical storms. Shipping and offshore platforms for oil and gas will have to adapt to higher extreme waves.


THE NOTION OF RISK Risk can be described as ‘‘The expected number of lives lost, persons injured, damage to property, or disruption of economic activity due to a particular natural phenomenon.”1 Systemic risk can be described as "The risk of breakdowns in an entire system, as opposed to breakdowns in individual parts and components.” 2 Varnes, D.J. (1984): “Landslide hazard zonation: a review of principles and practice." United Nations International, Paris.


Kaufman, G.G. and Scott, K.E. (2003): “What Is Systemic Risk, and Do Bank Regulators Retard or Contribute to It?” Independent Review 7 (3): 371–391.


Fisheries and tourism will be affected as ocean ecosystems are damaged by increasing acidity and temperature, lower concentrations of oxygen in sea water, and retreating sea ice. The combined effect of these factors is hard to estimate, but could be catastrophic. In polar regions, where climate change is most rapid, the thawing of frozen ground can damage pipelines and other infrastructure and some ice roads may disappear. Positive consequences include the opening of new Arctic shipping routes, and new opportunities for hydroelectric power in Greenland and elsewhere. Thermal power generation and some renewables will become less efficient as temperatures rise, while electricity demand for air conditioning will increase. More intense tropical storms will affect all forms of infrastructure, including power grids and transport networks.

Hard choices in mitigation and adaptation These are just a few examples of the complex consequences of climate change. The greatest challenge we face today is to find a way to break this chain of events. Will our leaders make the difficult and often unpopular decisions needed to create a sustainable world? Even if they do, we will face decades of worsening climate before things start to improve. Business has to adapt to this new risk reality, in order to remain competitive. DNV GL aims to enable businesses to adapt to tomorrow’s risks. We will provide a basis for decision making that is transparent, actionable and risk based so decision-makers can clearly understand their vulnerability to climate change, what measures are needed to adapt, and when those measures are needed.




The predicted average temperature rise may not seem worrying in itself, but warming will create serious hazards and challenges for society in the coming century. Many of these are already becoming apparent.

HEATWAVES will become more common. Heat stress can be lethal, especially if night-time temperatures stay high, as we saw in the recordbreaking European summer of 2003.

ICE AND SNOW will continue to melt. Sea ice in the Arctic is already retreating fast, and later this century we may see ice-free summers.

STORMS are expected to become more intense. This is driven by increasing evaporation from warmer seas causing higher wind speeds and precipitation rates. There is evidence that wind speed is already increasing among hurricanes in the North Atlantic.

WILDFIRES are becoming more frequent in many regions. This trend is likely to continue as a warming climate dries out forests, leads to more days of extreme heat and generates more lightning strikes. Exceptions will be in some areas where precipitation increases or temperature rises are relatively moderate.

LANDSLIDES are likely to happen more often. More intense rainfall adds weight to soil and porous rock, increasing the chance of failure. In some mountain regions, slopes that are now stabilised by ice will become more likely to collapse as temperatures rise and the ice melts. There is some evidence that landslides are already becoming more frequent.

FLOODS will become more frequent and severe. Warmer air can hold more moisture which will increase the potential for extreme downpours, particularly in already wet regions such as southern Asia. There will be regional differences, and some areas will see less flooding.



The latest information on climate hazards is presented on DNV GL’s Adaptation Knowledge Platform, in partnership with the Frontiers of Climate Science project, a collaboration between DNV GL, Statkraft, Shell, TCS and Xyntéo. A focused analysis, based in part on the latest findings from the IPCC Fifth Assessment Report, is summarised in the document ‘Climate Science – A perspective for business leaders’, with the objective of presenting the latest climate science to business leaders in an accessible form and unfiltered through political agendas.

DNV GL Adaptation Knowledge Platform:

EXTREME WAVES are likely to become higher. This is not easy to predict as it depends on many factors, including the speed and direction of local storm winds. Models suggest that the highest waves will get larger in some regions, notably the Arctic, North Atlantic and northern Pacific. There is evidence that this is already happening.

DROUGHT cannot be predicted as accurately as temperature, but dry parts of the globe will probably become drier, with a tendency for droughts to become longer and more frequent. The seasonal availability of fresh water will change in some regions as weather patterns shift and mountain glaciers disappear, potentially leading to crop failures.

SEA LEVELS will rise as warming water expands and land ice flows to the ocean. The range of predictions is wide, but some models estimate a global mean sea level rise of up to 1.5 metres this century if emissions remain high. The rise will vary from place to place because of changing weather patterns, ocean circulation and tectonic effects. If the West Antarctic ice sheet becomes unstable, global sea levels could rise 3-5 metres within centuries or possibly earlier. Should Greenland continue to thaw, it could cause a seven metre rise.

OCEAN ACIDIFICATION will increase as sea water absorbs carbon dioxide from the atmosphere, forming carbonic acid. The acidity of the sea has already increased, and by the end of the century it could be 100 to 200 per cent higher than in pre-industrial times. Organisms that build shells and skeletons out of calcium carbonate will die out in many parts of the ocean. These species form the base of many food chains, so the effects on the whole ocean ecosystem may be severe.



TIME TO ADAPT The climate will change even faster in the coming decade, shifting the baseline for hazards such as storms, flooding and drought. Business and society must adapt to the new risk reality that climate change and extreme weather pose, reducing their vulnerability and building their resilience. Adaptation means not only preparing for more frequent and severe extreme weather, but changing the very nature of our decision-making to be more resilient in a dynamic and uncertain future.

Preparing for extreme events For hundreds of years people have protected themselves and their property from extreme weather and natural disaster, with infrastructure such as flood defences and reservoirs, as well as insurance and contingency planning. All of this has been in the context of a relatively stable climate. Now this picture is changing, as climate change is altering the baseline for hazards such as storms, floods and heat waves. We are experiencing more severe extreme weather due to the increased level of CO2 and other greenhouse gases in the atmosphere. We expect these hazards to escalate in the future, so business and society must adapt.

Failure to adapt to climate change is one of the most critical risks to global systems, according to a 2013 survey by the World Economic Forum. The survey shows that such a failure is highly interconnected with other risks such as governance failure and food shortage. So far, the main efforts of policymakers and businesses to tackle climate change have been towards reducing emissions. This is necessary, but it will not prevent climate change in the next few decades. To be competitive in this new risk reality, businesses will need to become more resilient and prepared to adapt to the changes that are already inevitable.


Vulnerability and resilience Adaptation means taking measures that: žž Reduce vulnerability žž Build resilience Business and society are vulnerable to the different hazards caused by climate change. The level of vulnerability depends on their location, their assets, what kind of products or services they are delivering and how they have organised their value chains. The vulnerability is highest for those systems where both the likelihood and consequence of exposure are high. Resilience, in its simplest form, is the ability of a system to resist and bounce back in the face of a disruption. Climate change creates risks that are dynamic and uncertain, so to respond, a business must be flexible. It must be able to find different ways to conduct essential tasks, allowing it to continue operating during and after a major mishap or under continuous significant stresses.

"Sooner or later, all businesses will have to climate-proof their operations, from supply-chain to point of sale, from place of production to place of investment. Adaptation will be imperative if businesses want to avoid climate change impacts driving them out of business" Christiana Figueres, Executive Director, United Nations Framework Convention on Climate Change

ADAPTATION The IPCC defines adaptation as “The process of adjustment to actual or expected climate and its effects, in order to moderate harm or exploit beneficial opportunities.” 1 IPCC, (2012): Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation.




A comprehensive strategy can be built from these key elements We believe the most cost-effective adaptation approach to reduce vulnerability and build resilience to new climate risks can be achieved through a combination of systems thinking, improved application of risk assessment and risk management principles, and collaboration. Taking a broader view on climate risks In an increasingly complex and interdependent world, systems thinking is needed in order to žž reveal how elements in a system are interconnected žž understand these connections as systems evolve over time žž capture the full landscape of risks and solutions that business and society must consider Estimating risks and characterising uncertainty Businesses and society must conduct risk assessments to identify and assess climate changerelated hazards and risks. This is to provide a transparent and actionable basis for decision making, taking into account žž žž žž žž

current and expected climate systems thinking principles direct and indirect losses relevant uncertainties

Managing vulnerability and resilience Business and society must develop risk management capabilities that consider žž žž žž žž žž žž

leadership and governance flexibility innovation response recovery learning

Collaborating for greater impact It is beyond any one organisation, business or nation to fully adapt to climate change by itself. By collaborating, we can žž learn from each other and use the best expertise available žž coordinate preparation, response and recovery In the next part of this report, we will explore these four elements and their importance for climate change adaptation.


VULNERABILITY Vulnerability can be classified as physical, functional, or systemic.

A village in the mountains is not vulnerable to sea level rise, but may be vulnerable to landslides and avalanches.

Physical vulnerability refers to how a hazard might damage an exposed element. Functional vulnerability relates to the propensity that a hazard might cause an element not to work. Systemic vulnerability refers to the function of a whole system of connected elements, and includes damage to interconnections between elements. The concept of vulnerability applies only in relation to a specific hazard.

For the purpose of this report we use the IPCC definition: “Vulnerability is the propensity or predisposition to be adversely affected.” 1 The aim is to quantify this notion of vulnerability. IPCC, (2012): Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation.


RESILIENCE Resilience is an intrinsic feature of a system and is only manifested when exposed to a disruption. Various disciplines have developed their own working definitions. In engineering, resilience refers to the ability of a structure, such as a bridge, to return to its original shape after deformation (i.e., implies characteristics such as strength and resistance). In organisational management, it is the speed at which an organisation can return to normal performance following a disruption. For emergency response, it is how fast the community can be restored after a disaster. These disciplines see resilience in a system that retains its functionality through flexibility, learning and modularity. A resilient community can get back to normal life quickly, and so reduce long-term losses.

In this report we use the IPCC definition: “Resilience is the ability of a system and its component parts to anticipate, absorb, accommodate, or recover from the effects of a hazardous event in a timely and efficient manner, including through ensuring the preservation, restoration, or improvement of its essential basic structures and functions.” 1 We then provide a risk-based view by estimating loss. This gives us a transparent basis for decisions on how to select the most effective measures to build resilience. The characteristics of a resilient system depend on the context. In order to manage and measure resilience it is important to highlight the boundaries of the system and clearly define the outcomes we are trying to avoid. IPCC, (2012): Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation.





Four elements of adaptation 27



TAKING A BROADER VIEW OF CLIMATE RISKS The resilience of businesses is interdependent with that of the broader systems in which they operate, including supply chains, infrastructure and communities. Systems thinking is needed to capture the full landscape of risks and solutions that companies must consider when deciding on adaptation investments.

Increasing interdependency Our business, organisational and social systems are becoming more complex and interdependent. For a successful adaptation strategy, we need a dynamic approach that focuses on the system as a whole in order to

chains can tolerate small disruptions such as a moderate storm. They are flexible enough to absorb the shock. However, when exposed to extreme events such as a hurricane, these systems can be disrupted over a long time period, with far-reaching consequences for business and society.

žž reveal how elements in a system are interconnected

Systems thinking is needed A system is a set of elements that act together as a whole to produce a characteristic set of behaviour. The elements in a system can be connected directly or indirectly. 'The bathtub in the sky' (see box) illustrates some features of a simple system: the amount of CO2 in the atmosphere responds to the inflow/outflow of CO2. More complex systems in business and society, as well as the climate, include feedback loops and nonlinearities. They may be selforganising, adaptive and evolving.

žž understand these connections as systems evolve over time žž capture the full landscape of risks and solutions that business and society must consider Under normal circumstances, systems such as power generation, manufacturing, transport and supply

Four elements of adaptation 29

Corporations žž Availability of resources žž Impacts to physical assets žž Increased insurance costs

Value chains and local communities žž žž žž žž žž

Unhealthy workforce Impacted logistics Unstable communities Increased regulatory pressure Supply chain interruptions

Globally žž Weakened global consumer markets žž Water scarcity žž Displaced populations

Figure 3. Adaptation beyond corporate fence lines

Systems thinking reveals how elements are organised and interconnected, and provides insight into how an entire system develops. Beyond corporate fence lines Climate change affects business beyond corporate fence lines and national borders, and adaptation must account for this. It is critical for businesses to understand global trends, the links between operations and their value chains, the interlinkage between sectors and the mutual dependence between business and society (Figure 3). Over the past few decades, many businesses have adopted "just-in-time" policies and have similar practices – operating with low inventories. This increases the efficiency of a supply chain, but also makes it more vulnerable to disruption by extreme weather and climate change. Taking a broader view, such vulnerability increases systemic risks, threatening other businesses and interdependent communities.

A business with a narrow view of climate change adaptation may ignore important risks within its value chain and surrounding community. In 2011, floods in Bangkok closed down facilities making computer hard disks, and the effects cascaded along the global supply chain. Even though some costs were passed on to consumers (with USD 5 to 10 price increases for each hard drive), Hewlett Packard lost USD 2 billion, while NEC corporation shed 10,000 jobs. This chain of events showed that extreme weather can have far-reaching consequences for business and society. Global interdependence is also revealed by the 2010 drought in Russia. Lower crop yields led to restrictions in the export of agricultural products, which raised prices in North Africa and the Middle East, which in turn may have helped precipitate the widespread unrest across the region that followed. A good understanding of climate change and its potential impacts is essential to decrease the vulnerability of business operations. Further, it will



allow business to innovate processes, products and services to respond to climate change, providing a competitive advantage. Community risks are also business risks, because healthy and functioning communities are critical for the wellbeing of employees, and therefore for the ability of business to function. Similarly, disruption in business operations can reduce the resilience of communities.

A holistic risk management approach Existing risk management models allow organisations to evaluate, assess and prioritise key risk areas. By integrating these models with a systems approach, it becomes possible to assess the interdependencies in the system to seek effective solutions. By identifying key causal relationships we can gain non-intuitive insights into a system, and find the high-value leverage points to help overcome vicious cycles.

Four elements of adaptation 31

"There are no separate systems. The world is a continuum. Where to draw a boundary around a system depends on the purpose of the discussion – the questions we want to ask." Donella H. Meadows, systems thinker and lead author of the book “Limits to Growth”



ESTIMATING RISKS AND CHARACTERISING UNCERTAINTY The past can no longer be a guide for the future. The effects of future climate change can be predicted, but only with a measure of uncertainty – especially when it comes to the timing, location and severity of extreme weather. To make adaptation investment decisions under these uncertain conditions, business and society need a risk-based decision approach that is transparent, objective, robust and actionable.

Transparent and actionable decision making A climate change risk analysis should provide decision makers with an understanding of what losses and gains are likely to occur in the future, what measures should be taken to reduce losses, and when to take them. To effectively support adaptation investments, and provide a transparent, actionable basis for decision making, a risk assessment must take into account žž žž žž žž

current and future climate systems thinking principles direct and indirect losses relevant uncertainties

DNV GL has developed a risk assessment framework to support adaptation planning that addresses all these points (Figure 4). For a given system, our framework takes into account the full range of factors from emissions scenarios to infrastructure and community impacts. It considers potential adaptation measures and evaluates which are most cost-effective at reducing risk. Each part of the framework is described in more detail in the rest of this section.

Four elements of adaptation 33

Current climate

Hazard analysis

Vulnerability analysis

Risk analysis

Costbenefit analysis

Future climate

Figure 4. DNV GL's risk assessment framework

DNV GL’s risk assessment framework 1. Current and future climate. What climate change phenomena will affect our system? a. Current climate We can assess current climate by analysing observed data from the past 20 to 30 years. Although the climate is changing, it is an acceptable approximation over this reasonably short time frame to treat the data as being stationary, for statistical purposes (see box “Change and Statistics”). b. Future climate Our assessment of future climate starts with the four greenhouse-gas emission pathways (RCPs) used by the IPCC. They range from the high-emission pathway RCP8.5, through two intermediate pathways (RCP6, RCP4.5) to a lowemission, strong mitigation pathway, RCP2.6. Climate scientists generally treat all four pathways with equal weight, but in a risk assessment we have more freedom to make judgements about the sociopolitical future. For example a decision maker may consider that, given current trends, the high-emission pathways are more likely than the lower ones. So in our framework we include the option to give the different pathways different weightings. The RCPs then serve as an input to climate models. The choice of model is challenging, as there is no single “best” model. So our first step is to identify

the key climate phenomena - those phenomena expected to represent the highest risks in the given location, for the given structure or system. We then consult climate scientists to find which existing climate models are the most realistic in capturing these key phenomena, and finally choose an ensemble of three or four preferably independent models. 2. Hazards. How will the frequency of different hazards be affected by climate change? For example, hurricane hazard is described by a number of parameters including wind speed and projected path. Climate models are used to estimate how frequently any given values of these parameters will occur. 3. Vulnerability analysis. What are the possible consequences if a specific hazard occurs? A vulnerability analysis is used to understand what may go wrong with the system, by identifying, exploring, and evaluating weaknesses. The aim in our assessment is to quantify vulnerability, so it reflects both the probability of failure and the damage that follows from a hazardous event.



4. Risk analysis. What is the expected annual monetary loss for the considered system? Risk can be quantified by multiplying hazard by vulnerability. That is, multiplying žž the annual frequency of a given hazard žž the probability of failure of implemented barriers given the occurrence of the hazard žž losses resulting from each type of damage. In our approach all losses are mapped on a monetary scale. For example, the risk a factory faces from flooding is based on the frequency that the local river reaches flood levels (hazard), the probability that defensive barriers break or are overtopped and the cost if the water reaches the factory floor (losses). Often when conducting a risk analysis, the emphasis is placed on direct cost: property loss, injuries, fatalities or the cost to restore a structure. Less attention is given to indirect costs, even though these are often greater. Indirect costs include long-term consequences such as deferred production and loss of future income. It is important to apply a systemic approach, as indirect costs can accrue from the interdependence

of business, communities and infrastructure. For example, if the power goes out, critical services such as hospitals and public transport can be disrupted. 5. Cost-benefit analysis. What would be the most cost-effective adaptation measures to prevent or reduce the anticipated damage from hazardous events? Assets at risk should be managed by the owner in order to reduce total risk (expected loss) to a minimum. Adaptation requires large monetary investment. For this reason we have constructed a transparent decision framework that allows most types of loss to be measured on a monetary scale. Applicable measures are identified, their efficacy in preventing or minimising damage is determined, and the costs of implementation are estimated. A comprehensive analysis of both direct and indirect costs will support the decision maker in developing a balanced portfolio of adaptation investments - for example balancing the amount spent on preparation with the amount spent on responding to a disaster. The aim is to minimise overall expected costs over the lifetime of a structure.

Four elements of adaptation 35

Uncertainty in expected climate change When a climate model is used to simulate future climate, three types of uncertainty are in play. Each has a varying degree of importance, depending on the time horizon, the region and the weather phenomenon considered. Scenario uncertainty is the social and political uncertainty in future emissions of greenhouse gases and aerosol particles. Scenario uncertainties grow with time, reflecting the difficulty of predicting population and economic growth, the timing and extent of transfer to renewable energy sources, and the potential introduction of technological developments that may reduce future emissions, such as carbon capture and storage. Model uncertainty relates to the simplifications that must be made in order to simulate nature. Models have limited spatial and temporal resolution. Some processes, such as cloud formation, happen on scales too small for the global climate model to resolve, and therefore are handled by approximations. There is no single “best” model each model has some strengths and weaknesses - which prompt the use of several models in our analysis, as described above.

Internal uncertainties stem from the chaotic nature of weather. Most aspects of weather cannot be reliably predicted more than five to seven days in advance. The reason for this is that small disturbances to the weather system can rapidly grow until they alter regional and global climate. Chaotic weather patterns then transfer heat, momentum and material between atmosphere, oceans and land. This turns the earth's whole climate into a chaotic system, with perturbations that may last for seasons to years on land and from seasons to decades in the ocean. Models reproduce such perturbations, but cannot predict when they will occur. So this internal variability adds inevitable uncertainty to short-term climate predictions, on timescales up to a decade or so. Beyond the climate science, there are large uncertainties in assessing the consequences of climate change for various systems. It is especially difficult to predict indirect, long-term losses. Such uncertainty should also be accounted for in the risk analysis.

CHANGE AND STATISTICS Standard methods of analysing extreme events assume a climate that is stationary (unchanging in time) and ergodic (having the same properties when averaged over time as when averaged over space). In a changing climate this assumption is violated, so alternative statistical methods are required to predict the future. The most common approach is to simplify by analysing extreme events for different time slices, assuming that stationary conditions apply within each slice, and then compare the differences. For a detailed investigation, a “moving window” approach can be used. Typically, time-slices are 20 to 30 years.



MANAGING VULNERABILITY AND RESILIENCE To reduce vulnerability and build resilience in business and society will require a comprehensive risk-management strategy. Such a strategy should have risk assessment at its core and combine leadership, flexibility, innovation and other actions, enabling cost-effective measures to be implemented in all stages of adaptation: preparation, response and recovery.

A comprehensive risk management strategy An overall risk-management strategy for adaptation should allow business and society to develop a balanced portfolio of actions to reduce vulnerability and build resilience. Adaptation investments can be made in three different time periods: before the event occurs (prevention), during the event and in its immediate aftermath (response) and after the event (recovery). A comprehensive strategy, based on risk-based prioritisation schemes, allows us to compare options in a structured way to find the most cost-effective portfolio of actions in these time periods.

A framework for building resilience Figure 5 presents a management framework that provides this outcome through žž žž žž žž žž žž

leadership and governance flexibility innovation response recovery learning

The risk and vulnerability assessment is at the core of this framework. It relies on input from the other actions, and in turn provides risk-based information

Four elements of adaptation 37

Leadership and govermance



Risk and vulnerability assessment




Figure 5. Actions that contribute to resilience

back to them (Figure 5). This assessment identifies where the system is most vulnerable, so that adaptation measures and resilience building can focus on these the most critical areas. Leadership and governance lay the foundation for adaptation and disaster risk management efforts. Leadership must specify clear and common objectives and values. This contributes to resilience by providing the organisation with a clear path and a set of principles to guide necessary actions. Flexibility means the ability to have good options in any situation. Businesses that are able to shift between different options will be in a better position to respond to disruptions and changes in customer demand. Flexibility can be achieved through standardised processes (e.g., interchangeable parts and production facilities that can be substituted in the face of a disruption), a large supplier network, and processes and procedures that can handle postponements. Innovation means the creation of new resources, processes or values, including business models. Innovation may lead to resilience by stimulating new technology, capacity development or new patterns of response under uncertain climate conditions.

Response refers to the ability to mobilise in the face of an extreme event. Business and society can prepare their responses before an event takes place, enabling them to react more effectively. This increases resilience by reducing damage during and immediately after the event. Recovery is the process of rebuilding systems and structures after an extreme event. This increases resilience by helping business and society to restore social infrastructure to a functioning stable state as quickly as possible. Every disaster is unique, but general recovery planning can still help. Learning is the capacity to build, gather and retain knowledge, using previous experience to inform every action within the overall risk management strategy. In addition, adaptation should be based on the latest climate science, which is constantly being revised with new data and modelling techniques.

"Dynamism in our hyperconnected world requires increasing our resilience to the many global risks that loom before us." Klaus Schwab, Founder and Executive Chairman World Economic Forum



DNV GL COMMUNITY RESILIENCE ASSESSMENT DNV GL is developing an assessment tool to measure the implementation of a Community’s Resilience Management System (CRMS). The CRMS is a community’s framework of controls for managing essential social systems, community risks and driving continual improvement. A key challenge in improving resilience is that it is difficult to measure. Resilience assessments are complex, having to consider many social, environmental and economic issues. However, if we do not measure resilience we will struggle to identify the most effective actions to improve it. There are many different methods used by governments, NGOs and businesses to assess resilience, but no internationally accepted standards. Assessments can be time consuming and expensive, and they vary in

consistency. There is an urgent need to deliver resilience assessments that are effective and inspire confidence among all stakeholders. As part of the CRMS assessment, DNV GL is creating a standard method to measure community resilience. It is based on well-established management systems assessment methodologies but supplemented with materiality analysis and stakeholder engagement activities. The results of the assessment are quantitative scores and qualitative suggestions for improvement in areas such as Leadership, Risk Evaluation, Knowledge and Education, Asset Management, and Emergency Preparedness. The assessment can enable business and other stakeholders to evaluate the resilience of the communities on which they depend.

Four elements of adaptation 39

PREPARATION AND RESPONSE TO EMERGENCY EVENTS Climate change and extreme weather may present situations that have not been anticipated or thoroughly planned for. An organisation will face not only routine emergencies (familiar types of event), but also novel emergencies, where the event is new and unfamiliar in nature or magnitude. In such an emergency there will be relatively little understanding of the situation and trained and practiced responses may become inadequate. To be resilient in the face of novel emergency, an organisation should develop skills in problem diagnosis, improvisation, communication and collaborative actions. The response to a novel emergency should be fault tolerant, while in a routine emergency the ideal response would be executed with precision.

Both modes of emergency require excellence in planning, decision making and situational awareness. Situational awareness means being alert to danger. Organisations with good situational awareness constantly gather and assimilate information about extreme weather and other environmental hazards, and the impact these might have on relevant structures and systems. However, the type of emergency will affect how these processes are accomplished and what forms of leadership, organisation and resources are needed. For example, the early stages of a novel emergency call for collaborative leadership and flattened organisational structure to find the best forms of response. The arguments in this section follow the reasoning in Leonard, H.B. and Howitt A.M. (2008). 'Routine' or 'Crisis' - The Search for Excellence. Crisis/Response Journal 4 (3): 32-35.



Four elements of adaptation 41

HURRICANE KATRINA When Hurricane Katrina hit Louisiana and Mississippi in August 2005, it revealed problems with the government’s emergency capabilities. The Federal Emergency Management Agency struggled to establish an effective and coherent response in the days after the disaster. A number of businesses performed better. For example, the retailer Wal-Mart managed to use their operation (including their inventory control system, robust supply network and logistic capacity) to get food, water and other supplies not only to their own employees but also to the public at large. Enabled by their business model, Wal-Mart showed resilience in the face of Hurricane Katrina.



COLLABORATING FOR GREATER IMPACT Businesses need trustworthy, accessible knowledge about climate science and adaptation. Although adaptation requires local solutions, there are many lessons, methods and best practices that can be shared across sectors and geographies. Collaboration is needed to promote this sharing of knowledge. It also enables businesses and other stakeholders to co-ordinate their response to an event.

Interdependency calls for collaboration Climate change and extreme weather can have impacts beyond corporate fence lines. Many factors contribute to the complex risk picture that organisations are facing, and risks are connected in many different ways. This interdependency calls for collaboration between stakeholders from governments, business and civil society. As they are all interdependent they stand to gain from each other’s resilience building activities, as well as their own.

Collaboration means that stakeholders žž can learn from each other and use the best expertise available žž can co-ordinate preparation, response and recovery Expertise from many disciplines Adaptation is a multidisciplinary challenge. It involves bridging different knowledge domains such as climate science, economics, political science and engineering. The results of the science must be understood, and solutions that are politically

Four elements of adaptation 43

and economically feasible must be developed. It is essential to understand the way different uncertainties combine – uncertainties in climate projections and in the consequences of natural hazards. Public-private partnerships The most effective adaptation strategies will be achieved if actions are taken in partnership with surrounding communities to build leadership and use local knowledge, combined with scientific and technical knowledge, to invest in preparation, response and recovery. Business, government and other stakeholders should share the cost, as they will share the benefits. The different actors play complementary roles in managing climate change risks. Business for example can contribute to the collective effort through technology innovation and resilient infrastructure and facility design.

Sharing more and better information It will be necessary to reach out to new partners and collaborate to create improved tools and management techniques. Adaptation will require a better understanding of the links between different sectors, national borders and regulatory frameworks and it will require transparent sharing of information. This will also provide better insights into whether new market opportunities exist. Scaling up best practices within companies... Given the local nature of most adaptation measures, new solutions often arise in a decentralised fashion. Identifying and scaling up best practices can be a useful approach for developing more central adaptation strategies. ‌and between industries The same principle can very often apply across industrial sectors. Some of the best lessons can come from another industry, especially if it is at different stages on the adaptation path. It is important to stimulate this transfer of knowledge among different stakeholders.




Vulnerability and Resilience: Case Studies 45



Vulnerability and Resilience: Case Studies 47

HOW CAN WE BUILD MORE RESILIENT INDUSTRIES? Business must take the lead Until now, adaptation has commonly been seen as the preserve of non-profit organisations and development banks. But the growing frequency and severity of extreme weather has given businesses a new imperative to assess and improve their own resilience, as well as that of surrounding communities. Adaptation will become an increasingly important aspect of risk management for the shipping, oil and gas, and power sectors, as the lifetimes of new vessels, drilling platforms and power plants stretch into future periods of more severe climate change.

Industry challenges Engineering structures are typically designed for lifetimes of 20, 50, or 100 years. In the past, the corresponding design loads were obtained by using historical observations of the environment, an approach based on the fundamental assumption that the climate was stationary. This assumption no longer holds. We cannot rely on historical data to design new structures, and the design basis for existing structures may be outdated. Today, environmental load must be calculated using climate projections, which introduce additional uncertainty.

We face a number of questions: žž Which hazards will change most significantly? žž Which geographical locations will be most affected? žž Will it impact my value chain? žž What should I do in advance to best prepare and respond to extreme weather events? These questions are complex, with no simple answers. The final part of this report identifies challenges to the maritime, oil and gas, and electric power sectors and to cities. These face many of the same hazards, and in some cases they can be dealt with in the same manner – but not always, as climate change depends strongly on the specific location.

Case studies Each sector description is accompanied by case studies. In the previous sections we have introduced adaptation and resilience terminology, and theories about risk-based adaptation management. The selected cases will demonstrate these theories.

Š Getty Images

MARITIME Ships, shipyards and ports are vulnerable to climate change. The expected shift in wave patterns, increased wave heights, and more severe weather conditions will call for improved ship design and operational safety standards. Increased intensity of rainfall, heat waves, wind speeds, storms and storm surges all present different risks to shipyards and port infrastructure and operations.

Vulnerability and Resilience: Case Studies 49









žžPhysical damage due to

flooding (storms, storm surges, precipitation) žžPhysical damage due to extreme wind and waves


žžPhysical damage due to

flooding (storms, storm surges, precipitation) žžPhysical damage due to extreme wind and waves žžInterruption of supply of goods and transport of passengers


žžLoss of lives, ships and cargo

due to storms and extreme waves žžDowntime due to storms and extreme waves žžChanges in ship routes due to changes of storm tracks and severity žžChanges in global trading patterns, due to impact of climate change on production and import demand žžMore complex marine operations

Figure 6. Climate change risks for the maritime value chain

The shipping industry moves about 80 per cent of world trade, making it an integral part of the global economy. Climate change may create serious risks for the shipping industry (Figure 6). For example, extreme waves pose a risk to ships, as illustrated in the case study "Tanker design" in the next section.

Vulnerability to climate hazards The whole maritime value chain is exposed to climate change.

However, climate change also creates opportunities for the shipping industry, including increased activity in the Arctic and the transportation of new cargos such as water.

žž Changes in sea level, combined with storm surges, may flood coastal facilities žž Extreme precipitation may also cause flooding, especially in river-based facilities žž Extreme wind and waves can damage structures such as docks and cranes

Ports and shipyards will be affected by several hazards.



Ships have some of the same vulnerabilities, but with a different order of importance. Changes in waves and wind will have the largest impact on ship operations and structural design. In particular, changes in storm intensity, duration and wind fetch could in some regions lead to higher waves and more frequent extreme waves. The expected increase of marine growth in warmer waters may lead to increased fuel costs and GHG emissions.

Recent losses The following examples show how climate hazards have caused some recent losses in the shipping industry. Storms. Superstorm Sandy hit the New York area on 29 October, 2012. Sandy disrupted maritime operations and facilities throughout the Port of New York and New Jersey, while ferries between Hudson County, New Jersey and Manhattan were set adrift. In the port, the hurricane knocked out electrical equipment including traffic signals, cranes, and pumps that provide water for general use and fire protection. Rail transport to and from the port

was halted, and about 16,000 cars were damaged at the largest automobile processing port in the United States. Rogue waves. On 3 March 2010, the cruise ship Louis Majesty was on route from Barcelona to Genoa. A wave hit Deck 5, which is 16.70 metres above the waterline, smashing windows in a public area. Two people were killed and several injured. At the time of the accident, two wave systems were converging from different directions. Modern nonlinear wave models reveal that these systems were liable to trigger rogue waves because of the particular angle they crossed at, and the fact that they were characterised by almost the same frequency and energy.

Ways to adapt Actions to reduce the vulnerability and build resilience of ships, yards, and ports include: žž Investigating the impact of climate change and extreme weather on future operations and design. For example, higher extreme waves may

Vulnerability and Resilience: Case Studies 51

mean tankers and large ships need thicker steel decks. Many ports will probably need higher sea walls, and harbour entrances may have to be moved if weather patterns change. žž I mproving extreme weather event warnings. Weather forecasts are improving and ships can be better informed to avoid extreme conditions. How to manage the risks Adaptation in the maritime industry should include all the steps in the risk-based approach used by DNV GL. To begin with, this requires the latest knowledge about climate change and hazards specific to the maritime industry. More studies are needed to describe and quantify the potential implications of climate change on safe operation and design of yards, ports and ships, as well as related economic consequences. It is also important to consider lessons learned from operations in previous extreme weather events.

To operate in a changing climate, time-dependent statistical descriptions must be adopted. Meteorological and oceanographic models should be upgraded to take into account climate change trends and natural variability. With relevant uncertainties, these can be incorporated into a riskbased approach to the design and specification of operational criteria. There are still significant uncertainties in climate change predictions. Extreme waves, for example, will probably increase in height, but the magnitude of this increase is highly uncertain. The changes in wave height will vary with location, with expected increases in some areas and decreases in others. Revising rules and standards for ships may be premature for now, but DNV GL together with the International Association of Classification Societies (IACS) is already examining the options.



Vulnerability and Resilience: Case Studies 53



TANKER DESIGN The height of the most extreme waves will probably increase in some ocean areas, posing a greater hazard for shipping. A DNV GL study quantifies this increase in risk for various oil tanker designs, and gives recommendations for increasing hull strength.

DNV GL is at the forefront of developing rules and standards for marine structures. Tankers represent our largest market share, and so the impact of climate change on ship design in general is illustrated using tankers as an example. The most important structural failure mode is sagging of a loaded tanker in high waves. This is also known as hull girder failure, and in some cases it can sink a ship. We calculate the consequences of climate change for the risk of sagging failure. The analysis includes five oil tankers, ranging in size. Extreme waves and climate change The North Atlantic has the world’s most severe wave climate. Ship design is based on one-in-20-year sea conditions. From visual observations, the 20year significant wave height (the average of the one third largest waves in the 20 minutes wave record) in the North Atlantic is around 16 to 17 metres. We refer to this level as the base case.





Š Thinkstock


Such extreme waves are likely to grow as the climate changes, with change of storm tracks and with storm winds becoming more intense. Quantifying the change is difficult. To account for the changes projected over this century by various studies, and their associated uncertainties, we have considered the following increases of 20-year significant wave height: 0.5 metres, 1.0 metres and 2.0 metres. Consequences for tanker design We investigated the effect of such increases for five tankers: Product Tanker, Aframax, Suezmax, VLCC 1 (length 320 m) and VLCC 2 (length 316 metres). To evaluate structural integrity we follow guidelines set by the International Maritime Organisation (IMO)

for formal safety assessments. We used standard industry software to make structural reliability calculations, which allows complicated non-linear effects to be included by embedding a time-domain simulation code within a reliability code called PROBANÂŽ. As an example of the results, Figure 7 shows calculated annual probability of failure for the Suezmax tanker. The probability is plotted as a function of steel deck cross-sectional area. The results reveal similar trends for all ships analysed. When significant wave height goes up by one metre, reliability is maintained if the amount of steel in the deck is increased by about 5 to 7 per cent.

Vulnerability and Resilience: Case Studies 55





Base case

Annua Pf




1,0E-04 0,75











Deck Area Factor Figure 7. Annual probability of failure / Suezmax

The estimated failure probabilities should be used on a comparative basis only and should not be given a frequency of failure interpretation. The design specifications used in these calculations do not include corrosion allowance – the extra thickness of steel routinely added to allow for some rusting. Including this would reduce the failure probabilities by approximately an order of magnitude. There may also be other reasons that the frequency of sagging failure in real life is lower than the calculated values here. Weather-avoidance routing is not accounted for, and few ships operate in the North Atlantic throughout their entire lifetime.

Preparing for adaptation The shipping industry should continue to prepare for adaptation to climate change. However, changes to DNV GL rules and offshore standards cannot yet be justified, because projections of ocean conditions are still highly uncertain. Further studies are needed to understand and quantify the implications of climate change on the safe design and operation of ship structures. If these confirm that climate change is likely to lead to more extreme weather, the rules will need revision in order to maintain structural reliability levels.




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WATER SHORTAGES AND THE PANAMA CANAL The Panama Canal relies on a plentiful supply of water to operate locks and maintain navigability. Climate change and local demographic changes are likely to decrease water supplies, providing new challenges for the Canal. Our cost-benefit analysis shows that an existing adaptation plan is already moving things in the right direction to ensure the Canal’s continued operation.

The Panama Canal, at the narrowest point of Central America, links the Atlantic and the Pacific oceans. Using the Canal’s 80-kilometre system of locks and waterways, a ship can avoid sailing around Cape Horn, a route more than 20 thousand kilometres long. This gives an idea of the importance of the Canal both to ship owners and to the international community, as it cuts the cost of trade and also carbon emissions. Because of this strategic importance, we have analysed possible threats to the Canal brought by future climate change. More specifically, we have looked at how water shortages might affect its operation, and calculated the expected revenue losses. We have then evaluated a number of adaptation strategies as possible responses.








Atlantic Ocean


Gatun Locks


PANAMA CITY Miraflores Locks

Pacific Ocean

Gatun Locks

Mira Flores Locks

Atlantic Ocean NW

Pacific Ocean Approx. 82 km



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Functioning of the Canal The Panama Canal runs though Lake Gatun, the largest enclosed body of water in Panama. Since Gatun is above sea level, ships are first raised through a series of locks. At the other end of the lake, a similar system of locks lowers them back to sea level. Need for water Canal operation relies on the availability of water. Minimum water levels must be maintained in Lake Gatun for ships to navigate without running aground. Moreover, a supply of water from the lake is needed to operate the locks. The locks are filled and emptied by gravity, so each time a lock is used water flows down to the next section of the Canal, eventually reaching the sea. The Canal’s reservoirs also supply surrounding municipal and industrial demand, and local


hydropower generation. So the whole water cycle within the Canal’s catchment area must be carefully managed, taking into account all sources and uses of water. Impacts of drought The rainy season typically runs from May to December, and the dry season from January to April. Reduced precipitation, high evaporation and water use combine to lower the level of Lake Gatun during the dry season, until the rainy season sets in and the lake is refilled. In most situations there is enough water in the lake to satisfy the various demands imposed on the Canal throughout the year. But in some periods of drought, a lack of water has restricted navigability, limiting the draught of transiting ships. Such restrictions may result in lost revenue.







Future Present













Figure 8. Probability distributions of water level in Lake Gatun observed in recent decades and projected for late this century - assuming no adaptation

Water level [feet]

Risk-based adaptation analysis Our analysis calculates the expected monetary losses due to low water levels during the dry season (January to April) in present and future climates. We start by modelling water flow in the Canal’s catchment area, accounting for žž contributions: rainfall and consequent river discharge, regulated release from artificial reservoirs žž losses: evaporation, flow through locks, municipal and industrial demands The main climate-related variables are rainfall and evaporation. For “present climate” these are derived from observations over the period 1950 to 2000. For future climate, projections over the period 2060 to 2100 are made by global climate models. Here we use the CMIP5 dataset. The other variables are derived from observations and future projections of municipal and industrial water demands, and of water consumption by locks in present and future configurations. Water levels may be affected by these system changes as well as by climate change.

A Bayesian Network (BN) is used to model the water levels in the lake probabilistically. This process takes probability distributions for the various inputs such as rainfall, and combines them to provide probabilities of different resulting water levels. Publicly available data and weather observations obtained from National Oceanic and Atmospheric Administration (NOAA) were used to compute the probabilistic features of the modelled variables and include these in the BN. Water levels with no adaptation In a baseline scenario with no adaptation, our results suggest that climatic and system changes will tend to dry out the Canal. This can be seen in Figure 8, showing present and future probability distributions of water level at the midst of the dry season (end of February). The mean future levels are about 5 feet (1.5) meters lower, enough to force the temporary closure of the Canal almost every year. A considerable amount of this reduction is due to system changes: increases in water demand due to enhanced Canal operations and growth in the local population and economy. This highlights the importance of evaluating system changes along with climatic ones when performing an adaptation analysis.



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Figure 9. Comparison between risk and cost for different Canal adaptation strategies (USD million) Baseline

Comparing adaptation strategies Despite these results for the baseline scenario, such frequent closures of the Canal are very unlikely to materialise in the future because adaptations are already planned by the Panama Canal Authorities (ACP). Their Panama Canal Expansion Program (PCEP) includes measures to save water use by the locks, increasing the lake’s water capacity, and dredging to enhance the Canal’s operational limit. However, the baseline scenario can be used as reference against which to compare adaptation strategies. DNV-GL has carried out a cost-benefit analysis on this basis. Adaptation costs were taken from estimates provided in the PCEP, while benefits correspond to the reduction of expected revenue loss when adaptation is implemented. Our results suggest that, out of a number of possible combinations of the adaptation options considered in the PCEP, the strategy planned by the ACP in the programme is among the most cost efficient: it minimises the sum of cost of adaptation and revenue losses.




This is shown in Figure 9, a bar plot of risk and cost for different possible adaptation strategies in USD million. The baseline scenario has no adaptation, whereas the “Full” adaptation strategy represents implementing all the different options set forth in the PCEP to their maximum extent. Spikes in Figure 9 show that in a few cases, increasing investment does not feature a corresponding reduction of risk. It can be concluded that the ACP’s chosen plan achieves a large reduction in risk with a comparatively minor adaptation investment. Disclaimer The analysis and conclusions presented in this document stem from an independent DNV GL Strategic Research and Innovation project, and are based upon a selection of publicly available data regarding the Panama Canal. DNV GL has not verified the reliability of the data collected. Any use of this document and the content thereof shall be at the sole risk of the user.

OIL & GAS The petrochemical industry is vulnerable to many aspects of climate change - especially storms, waves and melting ice. Adaptation will include new design criteria and emergency planning, as well as physical engineering solutions such as the hardening of offshore platforms, onshore ice roads, and rerouting and resisting of other infrastructure.

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damage from wave height and high winds



damages due to flooding (storms, storm surges, precipitation) žžPhysical damages due to extreme wind and waves



damage from wave height, high winds



žžPhysical damage

žžPhysical damage

from flooding, storm surges, high winds and wave heights žžPhysical damage of on-shore pipelines due to wildfires, flooding and thawing permafrost

from flooding, storm surges and high winds žžLoss of access to water

Figure 10. Climate change risks along the oil and gas industry value chain

Oil and gas account for more than half of the world’s primary energy consumption. With projects and operations around the world, the sector is exposed to climate change risks along its entire value chain including exploration, development, production, transport, processing, refining, distribution, and consumption (Figure 10). The specific risk to offshore platforms posed by extreme waves is examined in the next section.

the number of Category 4 and 5 hurricanes in the Gulf of Mexico is expected to increase) along with higher waves, melting snow and ice and sea level rises.

Vulnerability to climate hazards Climate change threatens to disrupt production and increase the cost of doing business. Major risks include more intense tropical cyclones (for example,

žž Production infrastructure suffers the same risks of physical damage. For example, offshore platforms are vulnerable to extreme waves.

žž Exploration vessels and equipment may be physically damaged by more intense hurricanes and typhoons projected for the future, and by higher extreme waves.



© Thinkstock

žž As ocean water becomes more acidic due to absorption of carbon dioxide, concentrations of sound-absorbing chemicals drop, which means undersea noise travels farther. This may require modifications to current production operations in order to protect marine mammals. žž Transport and terminals are vulnerable to a combination of rising sea levels, higher waves and storm surges, as well as wind from severe weather. žž Ice roads are threatened by rising temperatures in the Arctic, which is warming much faster than the global average. In Alaska, the season for ice road operations has halved since 1970. žž As ice coverage decreases in Alaska, polar bears are moving to new areas, necessitating rerouting of ice roads and barriers around drill sites to avoid polar bear dens. žž On-shore pipelines in the Arctic may be hit by thawing permafrost, which could undermine them. In the tropics and subtropics, pipelines may be threatened by more frequent wildfires.

žž Refining and processing require abundant water supplies, so may be hit by changes in precipitation. The industry will need to explicitly consider future climate conditions; identify hazards, exposure, and consequences; and develop and implement adaptive measures that reduce climate-related risks. Recent losses Hurricanes. The oil and gas industry has already experienced losses along its entire value chain. For example, hurricanes Katrina and Rita disrupted the oil and gas sector in the Gulf of Mexico. They damaged infrastructure and forced the evacuation of oil rigs, resulting in a temporary slump in production. Ways to adapt Many actions can be taken to reduce vulnerability. žž Current design criteria will need to be revised in many cases. Offshore platforms, for example, could be built with higher decks to adapt to the increasing height of extreme waves in some regions.

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žž Coastal buildings and equipment may have to be set further inland, while sea walls should be improved. žž Pipelines may have to be rerouted or redesigned where frozen ground is liable to thaw. žž The lifetime of ice roads can be extended using solar-reflective subsurface treatments and other engineering modifications. When extreme weather strikes, operations need to be resilient in order to keep consumers supplied. Actions to enhance resilience include: žž Improving emergency planning and response capabilities. žž Additional water storage capacity, and improved efficiency, to cope with intermittent water supplies for shale gas extraction, and for conventional refining and processing. žž Procuring insurance and hedge contracts to offset the consequences of weather-related risks.

How to manage the risks Adaptation is best approached by applying structured risk-management principles, an approach that is already widespread within the oil and gas industry. As in all sectors, adaptation is to some extent a local decision, but the choice of adaptation may also affect general stakeholders as well as society. Climate hazards, infrastructure, resources, and other factors vary from place to place and time to time. As a result, it is essential to approach adaptation via a stepwise process of identifying potential hazards, assessing risks, evaluating potential hazard mitigation options, and selecting robust actions that are effective across a range of future scenarios. Research and information-sharing will be an essential starting point. For example, climate scientists can be employed to advise project planners on the potential impacts of climate change and extreme weather.



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OFFSHORE PLATFORMS IN THE NORTH SEA The safety and operability of offshore platforms in the North Sea could be hit hard by climate change. Extreme waves can cause severe damage to platforms, and our analysis suggests that future conditions may render the design of existing rigs incompatible with present safety criteria. Decks should be raised, and support jackets strengthened.

Safety rules and the environment Offshore platforms are designed and constructed according to rigorous rules which guarantee compliance with safety criteria. These rules take into account environmental factors such as wave height and wind speed, but in a future climate these factors may change. In this analysis we investigate whether changes in wave height may compromise the safety of platforms, and if so, how the design should be adapted. Our main focus here is on the structural dimensions of platforms, while implications for operability, disruption and down time are also acknowledged. DNV GL`s risk assessment framework is used in this study.






TWO POSSIBLE ADAPTATION STRATEGIES FOR THE PLATFORM Two possible Two possible Two possible adaptationadaptation strategiesadaptation strategiesstrategies for the platform for the platform for the platform

Unmodified BaseUnmodified Design Unmodified Base Design 2. Strengthening the Jacket 2. Strengthening the Jacket the Deck 1. Raising the Deck 2. Base Design 1. Raising Strengthening Jacket 1. Raising the Deck UNMODIFIED 2.the STRENGTHENING




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Wave models Our analysis is based on state-of-the-art climate projections and wave simulations. Our partners at DHI generated projections of waves for the North Sea using their proprietary wave model MIKE21, coupled with three different Global Climate Models (GCMs) to model future atmospheric climate. The three GCMs are: ARPEGE (developed by MétéoFrance, France and ECMWF, UK); BCM (Bjerknes Centre for Climate Research, Norway); and ECHAM5 (Max Planck Institute, Germany).

Our results show that the probability of wave-in-deck later this century is likely to be much higher than it is now (see Figure 11). The results vary considerably between different GCMs, but all three GCMs suggest a substantial increase. The probability of platform collapse will increase correspondingly. These results suggest that modifications are needed. Two options are to raise the deck, so it is less likely to be reached by waves, or strengthen the supporting jacket, to increase the resistance against collapse.

To give higher resolution in the area around the North Sea, each GCM is plugged into a regional model, HIRHAM5 (developed by the Danish Meteorological Institute, Denmark).

Results We used these wave projections to estimate the risks for a platform typical of rigs in the North Sea, with deck heights about 20 metres above mean sea level. Specifically, we looked at the probability that waves will hit the upper side of the deck - called wave-indeck. This event is rare, as only the most extreme waves are high enough, but it is very dangerous, and can lead to the collapse of the whole structure.

Present Future

Wave-in-deck probability [10^-4]

All simulations assume the SRES A1B emission scenario: a future where CO2 emissions remain high until 2050 (although lower than the RCP8.5 “business as usual” pathway), and then fall off in the second half of the century.




0 Present




Figure 11. Probability of wave-in-deck, per year. “Future” refers to the period 2070 to 2099



Risk, Cost [MUSD]




Total Risk Cost










Figure 12. Cost, lifetime risk and sum of the two for different deck raises



3.5 Deck raise [m]

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Risk-based analysis of adaptation options We carried out a cost benefit analysis of these strategies to evaluate which is best and the extent to which it should be implemented.

corresponds to the minimum of cost plus monetary risk. It is seen from Figure 12 that the optimal deck raise is about two metres. The shaded area accounts for climate model variability.

We quantified the monetary losses to the owner of a platform if wave-in-deck causes limited damage to the deck, or collapse of the whole structure. We then calculated the expected annual monetary losses (the risk) that the platform faces under different implementations of the two strategies. The costs of different adaptive implementation measures were also estimated and compared with the corresponding savings from risk reduction.

For the specific platform analysed, raising the deck is the most attractive strategy. The reason is that as the probability of wave-in-deck diminishes, both limited damage and failure of the whole structure become less likely. Strengthening the jacket reduces the probability of global failure but does not alter the frequency of limited damage from wave-in-deck.

Figure 12 shows the results for deck raising. In strictly financial terms, the optimal implementation

It is interesting to note that the minimum for the total loss is quite shallow. This implies that for the platform evaluated, the optimal action is not highly sensitive to climate uncertainties.

ELECTRIC POWER Climate change poses risks to electrical power generation and distribution. Warming will gradually cut the efficiency of power plants and transmission, and sometimes increase electricity consumption. Storms and other forms of extreme weather threaten to damage grids. There will be a need to harden infrastructure and increase capacity.

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žžFuel supply

interruptions (storms, changes in river flows)



thermal and solar generation efficiency (high temperatures) žžAlterations in hydro-electric capacity (changes in precipitation) žžPhysical damage (flooding, storm surges, high wind)



reductions in efficiency and capacity žžStorm damage



reductions in efficiency and capacity žžStorm damage


žžOutages žžIncreased cooling demand


heating demand

žžIncreased peak demand

Figure 13. Risks from climate change along the electrical-power value chain

Without a reliable supply of electricity, many aspects of daily life would cease. Think of a world with no telecommunications, computers, traffic signals or refrigeration. Climate change and extreme weather can hit electricity distribution along the entire value chain, from interruptions in fuel supply, through reduction in power station capacity, damage to transmission lines, and changes in demand. The risks to power supply from a Sandy-like superstorm are examined in the next section.

Vulnerability to climate hazards Climate change exposes electricity infrastructure to a spectrum of climate hazards (Figure 13). Against a background of long-term warming, sudden extreme weather events will become more common, with many impacts on power systems.




žž Supply of fuel (coal, oil, gas) can be disrupted by storms, floods and other extreme weather. žž Thermal power plants become less efficient as cooling water becomes warmer, and may even be shut down during heatwaves or when a drought drastically reduces river flow. Renewable energy resources can also be affected: high winds can damage wind turbines, high temperatures reduce the efficiency of solar panels and drought decrease hydroelectric capacity. žž Transmission and distribution equipment can be damaged by high winds, lightning and flooding; extreme heat events cause surges in electricity demand, straining the capacity of the system. Higher average temperatures reduce the efficiency of transmission. žž As average temperatures increase, consumer demand for cooling homes and workplaces will rise. Energy delivered and peak capacity will need to be increased to cope with the increasing number and duration of heatwaves.

Recent losses Extreme weather is the main cause of power outages in many parts of the world. This disrupts normal life, and can lead to substantial economic losses and human suffering.

Heat waves. The 2003 European heat wave, which caused more than 70,000 deaths, also severely affected electricity production. August temperatures in several cities were up to 10 ºC higher than normal, raising electricity demand for air conditioning at the same time as power production was impaired due to an inadequate supply of cooling water. In France, 17 reactors had to reduce output or were shut down. The cost of electricity rose to USD 1,350 per megawatt-hour, compared with USD 128 in normal summer months. Électricité de France was not allowed to pass along the cost to consumers, and the company lost USD 300 million. Hurricanes. Hurricane Katrina in 2005 knocked out 3,000 miles of the transmission system in Louisiana and Mississippi, causing outages for 1.1 million customers. Matters were compounded when Hurricane Rita made landfall just 26 days later; together the two storms cost Entergy Corporation USD 2 billion. Droughts. In 2012, a massive blackout in India left more than half a billion people without power. While a number of factors contributed to the outage, low rainfall during the monsoon season reduced the output of hydroelectric plants, which India relies on for much of its power needs. Moreover, droughtstricken farmers used more power than expected to run water pumps to irrigate their crops, adding to electricity demand.

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Ways to adapt Adaptation measures can decrease losses by reducing the grid's vulnerability and increasing resilience.

žž deploying advanced technologies to sense disturbances on the grid and adjust the balance between generation and load

One provision is to physically harden power grids, so they are less vulnerable to high wind, ice storms and snowstorms.

How to manage the risks Power suppliers seek to manage the risks of electricity outages by balancing investments in infrastructure and maintenance with the potential losses posed by extreme events.

žž upgrade transmission towers from aluminium to galvanised steel lattice or concrete, and install guy wires and other supports žž replace wooden utility poles with steel, concrete or composites žž increase the number of poles per kilometre of line žž trim trees near power lines As well as reducing vulnerability, adaptations should make supply more resilient. So in the face of a catastrophic event that damages the grid despite physical hardening, suppliers should find ways to ensure uninterrupted power to critical sites such as telecommunication networks, water-treatment plants, and hospitals, oil and gas refineries and gasoline stations. Grids must also be adapted to handle higher loads, loss of efficiency and increasingly sudden increases in demand, by žž increasing the capacity of generation, transmission and distribution systems

Investment decisions are made difficult by a number of factors and questions, including: (1) uncertainty over frequency, duration and intensity of extreme events; (2) what level of risk (loss of supply) is tolerable; (3) how much outlay on investments is acceptable; and (4) how to balance the certain, near-term cost of hardening the grid against the uncertain, longer-term risks from severe weather. For regulated electric utilities in particular, decisions will be made in a context where expenditure can be justified by the benefits to society. Consumers of electricity will bear the burden of increased cost, but will also be the recipients of the benefits from a more reliable supply. The process of decision-making normally includes proceedings before a public utility regulatory agency which approves expenditures and sets electricity prices. Stakeholders other than business and government often take part in these proceedings. In these circumstances, all parties can benefit from a transparent and comprehensive risk management approach that highlights the costs and benefits of alternative adaptation measures.



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POWER SYSTEMS AND SUPERSTORM SANDY Superstorm Sandy hit New York City and the New Jersey coast in 2012. It brought an unprecedented storm surge and consequent flooding that caused havoc to electrical power supplies. Hundreds of thousands of people were without power for several days. A DNV GL study shows how a Sandy-like storm under future climate conditions is likely to be even more destructive, and explores adaptations to reduce the impact on electrical systems. Sandy’s impact on power supplies Superstorm Sandy made landfall on 29 October 2012 near Atlantic City, New Jersey. It was the most destructive storm of the 2012 Atlantic hurricane season, taking 286 lives and causing more than USD 68 billion in property damage. Before landfall, Sandy had been the largest Atlantic hurricane on record. Reclassified as a post-tropical storm by the time of landfall, it still packed a punch, with sustained hurricane force winds of approximately 128 km / hour. An upper-level low over the eastern U.S. and a blocking ridge over Atlantic Canada channeled the storm on a western path, so it made landfall with an impact angle nearly perpendicular to the coastline.






Flooding and high winds damaged more than 7,000 transformers and 15,200 utility poles. More than eight million customers across 21 states lost electrical power as a result. The outage hit industry as well as residential customers. Within the energy sector, for example: fuel pumps at gas stations could not operate; the Colonial Pipeline, which brings refined products from the Gulf of Mexico, was partly out of action; two oil refineries with total capacity of more than 300,000 barrels per day were temporarily shut down; and four more refineries with a cumulative capacity of 862,000 barrels per day were forced to reduce their output. Several power plants in the Northeast, including a number of nuclear power units, were damaged or experienced temporary shutdowns due to high winds and flooding. Ports and petroleum terminals were also damaged. In short, Sandy showed the power of climate-related events to strike at modern society, and highlighted the importance of creating and maintaining resilient infrastructure. Extreme weather events are the leading cause of power outages in the United States, and the frequency and intensity of extreme weather is expected to increase as climate change occurs.

Long Island case study Deciding how to increase resilience to storms is a question of balancing costs and benefits: the cost of investments in grid hardening and preparation, against the benefit of reduced risk of damage and power outages. Defining the costs is relatively straightforward. Defining the benefits is more difficult, especially given the uncertainties about future severe weather events, and we believe the best way to accomplish this is using a risk-based approach.

So in the aftermath of Sandy, DNV GL undertook a study to identify cost-effective adaptation options. The aim was to identify approaches to reduce the vulnerability and increase the resilience of the power grid to extreme weather events. Our case study focused on Long Island, which suffered some of the most severe outages. The case study was intended to address the following questions: žž What storm hazards should we plan for? žž How will a changing climate alter the frequency, intensity and location of extreme weather? žž How might the electric grid be affected and with what consequences? žž What can we do to prevent damage to the grid? žž How can we minimise consequences of electric grid failure? žž What are the investments with the greatest return?

Steps in modelling DNV GL’s risk analysis framework was applied to provide insight into these questions. First, the US National Center for Atmospheric Research (NCAR) provided projections of future climate-related hazards based on global climate models. Then in concert with the Long Island Power Authority (LIPA), we identified a sample of electric grid assets at risk. The vulnerabilities of transmission and distribution components were determined using a variety of standard references and power engineering methods, augmented by new power system analysis approaches developed in this project.

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WRF control simulation 2012 Observed 2012 (National Hurricane Center (NHC)) WRF simulation 2050 Figure 14. Comparison of observed (2012), modelled (2012) and simulated 2050 track of Superstorm Sandy (Base map: Š 2014 OpenStreetMap Data CC-By-SA)

Climate projections According to NCAR: One of the many intriguing aspects of Sandy was its multiple phases. After striking Cuba as a Category 3 hurricane, the storm dipped below hurricane strength, but then it slowly gained power and size as it moved northeast, paralleling the Gulf Stream. Typically, such a system would continue moving toward the northeast and east, away from North America. But a huge mass of high pressure centered in Greenland partially blocked that path. At the same time, the polar jet stream was dipping sharply into the eastern United States. These two features steered Sandy on a path that swung to the west-northwest into southern New Jersey. As the storm made its leftward bend, it reintensified to Category 2 status and then began transforming into a post-tropical cyclone. This prompted the National Hurricane Center to reclassify

Sandy as post-tropical at 7:00 p.m. EDT on October 29, only an hour before landfall. For our study, NCAR reproduced these conditions in their weather research and forecasting (WRF) model, creating a control simulation. The predicted storm track, surface wind, and rainfall are very similar to those of the real Sandy (Figure 14). The control simulation was then perturbed to predict what a similar storm would look like in a world where climate change has increased the temperatures of air, soil and sea surface. Scenarios were examined corresponding to warming estimates for 2020, 2050, and 2100. All assume that carbon emissions follow the high pathway RCP8.5. Results of the model showed that increased temperatures enhance the blocking ridge, forcing the simulated storm along a more northerly track than the actual Sandy, and delaying landfall.







2012 - CURRENT

2050 - FUTURE

Figure 15. Modelled 24-hour rainfall on 30 October 2012 (current climate) and on the equivalent day for a Sandy-like storm in 2050 (future climate)

When approaching the coast, the simulated storms produce slightly higher surface wind speed and heavier precipitation than the control simulation. After landfall, they produce surface winds faster by up to 6 metres per second. These higher wind speeds lead to the greatest hazard in these simulations of future climate: a substantial increase in storm surge. Climate change also leads to higher precipitation. The 2100 simulation produced nearly double the rainfall of the control simulation throughout Long Island. Figure 15 shows 24-hour precipitation results for two model runs: the control run in present conditions and a run for 2050 where air, soil, and sea surface temperatures were increased by 2ºC, 0.6ºC, and 2ºC respectively. Higher storm surge, augmented by higher rainfall, would lead to more severe flooding.

Risk analysis Parameters such as wind speed, precipitation, and storm surge from the NCAR analysis were used to evaluate the exposure of power transmission and distribution infrastructure to hazardous conditions.

The exposure assessment involved creating a series of fragility curves for each type of equipment, relating probability of failure to the weather conditions. Novel methods were developed in this case study to determine the survivability of transmission and distribution grid components. The effectiveness of adaptation measures, such as physical hardening of the grid, installation of microgrids or distributed generation, could then be assessed. Future applications of the DNV GL risk assessment framework will also include an economic analysis of the costs of outages, both direct and indirect (such as lost wages or tax revenue). That will allow quantitative risk-based cost-benefit assessments of various mitigation measures.

Power system vulnerability Using the DNV GL adaptation approach the vulnerability of selected power system components on Long Island was studied, and measures to mitigate losses were examined. The Woodmere transmission substation was one of 12 on Long Island flooded during Sandy. Its base elevation is 2.2 metres above sea level, while Sandy’s storm surge resulted in water levels 3.14 metres

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above sea level. We examined the option of raising the level of the Woodmere substation by one metre. Our modelling showed that under the same flooding scenario, the probability that the substation would continue to serve at least 95 per cent of its load from was increased from 25 to 100 per cent. We found similar results for a related substation.

Adaptation strategies Many strategies exist for adapting to extreme weather and climate change across the components of power system infrastructure. Selecting among these requires a careful balance between the costs of adaptation and the benefits of avoiding power outages.

Long Island’s overhead power transmission system went relatively unscathed in Sandy. The case study showed that even an enhanced future Sandy event would not be expected to cause significant overhead transmission damage, either, as the wind speeds are only marginally higher.

DNV GL has begun to develop a detailed costbenefit analysis tool. Although the task is incomplete, we have created climate forecasts, linked those to the exposure of infrastructure, quantified risks, and examined the efficacy of selected mitigation measures. DNV GL will continue to develop a climate risk and adaptation framework for power systems, so that operators can identify optimal solutions, compare costs and benefits, and provide insights that will help other users maximise the value of adaptation investments.

However, if stronger storms (e.g., with winds in the range of a Category 2 or 3 hurricane) were to hit Long Island, overhead transmission lines and support structures are more likely to be damaged, which when combined with substation flooding in this study, reduced load served immediately following the storm to 88 per cent. In this situation, the study showed that investments in additional sensors, grid communications, and automation to facilitate rescheduling of flows could increase load served to 96 per cent.

CITIES Cities are becoming the dominant form of human community. Cities in developed and developing countries already face signficant challenges from climate change and these challenges are bound to increase. To reduce vulnerability and build resilience in these highly complex communities, collaboration will be essential.



Urban world The world is undergoing the greatest wave of urban growth in history. As cities expand, there is a growing need to adapt to climate change and build resilience into the urban landscape.

Vulnerability to climate hazards Depending on location, cities will have to cope with rising sea levels, increased flooding, drought, stronger cyclones and storms, periods of more extreme heat and cold and the spread of diseases.

Urbanisation is most rapid in developing countries which are also typically the most vulnerable to climate change. They face particular challenges with warming and extreme weather which are likely to intensify existing problems such as water scarcity and food security. Poorer countries also have less capacity to adapt to the impacts of climate change and large investments are required in education, health and sanitation infrastructure, energy security and state institutions.

Some of these hazards are aggravated by the built environment. Heat waves tend to be magnified by the urban heat-island effect, while floods can be swollen where natural drainage is blocked by concrete and asphalt.

In contrast, cities in developed countries are in a better position to adapt with more financial resources and greater availability of quantitative data to inform decision makers. However, many cities in developed countries are still vulnerable due to geographical location and complex physical infrastructure exposed to the hazards of climate change. In complex systems, cascading failures can be created by climate-induced stress. Such complex systems not only exist within cities, but also link cities with the wider world.

Recent losses Cities across the globe have felt the impact of climate change. Storms. We have seen how Hurricane Katrina and Superstorm Sandy affected urban areas. Super typhoon Haiyan hit the Phillipines in November 2013 with a wind speed of up to 314 km / h and gusts up to 370 km / h. The wind and rain lashed the islands of Leyte, Samar and Cebu, causing more than 5,000 deaths – the majority of them in the devastated city of Tacloban where 670,000 people were displaced and estimated financial losses were USD 14 billion.

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Heat waves. The European heat wave of 2003 killed 70,000 people. Large cities are generally hotter than rural areas, and Paris saw temperatures close to 40°C. The increase in expected mortality across the Paris area was 130 per cent, much higher than the overall figure for France of 60 per cent.

žž developing transport infrastructure to create emergency access routes for key goods and people žž maintaining a high stock of medicines žž ensuring that food supplies are sourced from different geographic areas

Ways to adapt Adaptation measures in cities will vary considerably depending on political, cultural, historical and climatic conditions, and of course location. Because cities face different hazards, any adaptation measure must be tailored to the specific location. For example, some cities may need to guard against sealevel rise while others must protect themselves from the impacts of hurricanes.

Resilience has become a key focus area for several cities. For instance, in New York, the-then Mayor Mayor Michael Bloomberg proposed a USD 20 billion adaptation plan in 2013. There is an urgent need to increase the resilience of cities, to ensure continued development and prosperity.

Physical adaptation measures to reduce vulnerability to various hazards include: žž hardening of critical infrastructure such as stormdrainage systems žž protection of water supply and treatment plants Of equal importance are measures to increase resilience. These include: žž developing early warning systems for storms, flooding and other hazards žž installing backup energy systems

How to manage the risks Local knowledge is needed to help cities and communities increase their capacity to learn from past disasters, and improve risk reduction measures for future protection. This will require close collaboration between governments, NGOs, businesses and other stakeholders to continuously share knowledge and provide financial support.



Vulnerability and Resilience: Case Studies 87



FLOODING ON LONG ISLAND IN 2050 AND 2090 In 2012, Superstorm Sandy brought unprecedented floods and destruction to Long Island and its surroundings. A simulation by DNV GL shows that by 2050 and 2090, climate change could give a Sandy-like storm much greater impact, as higher sea levels and warmer seas increase the severity of flooding. This highlights the need for adaptation planning. Future Sandy hits New York City hard Long Island and the New York area are prone to flooding. Built around inlets and waterways close to the coast, most of the metropolitan region is less than five metres above mean sea level, making it highly vulnerable to hurricane storm surges. When Superstorm Sandy hit in 2012 it caused immense damage, even flooding the subway. If a storm similar to Sandy was to strike the New York area in 2050 and 2090, it would cause even greater damage, partly because sea levels are expected to be higher by mid and end of the century.




Observed vs. Model Water Levels Sandy Hook, NJ - Station ID: 8531680 - 27th to 30th October 2012

6 5

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Water height (metres)


Verified water level Model water level

4 3 2 1 0 -1

Observed vs. Model Water Levels The Battery, NY - Station ID: 8518750 - 27th to 30th October 2012

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Verified water level Model water level

4 3 2 1 0 -1








Observed vs. Model Water Levels Montauk, NY - Station ID: 8510560 - 27th to 30th October 2012

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4 3 2 1 0 -1 0







Water height (metres)

Water height (metres)









Observed vs. Model Water Levels Bridgeport, CT - Station ID: 8467150 - 27th to 30th October 2012

6 5

Verified water level Model water level

4 3 2 1 0 -1 0







Figure 16. Validation of simulated storm surge against measured values

DNV GL has performed a hazard analysis to quantify the magnitude and impact of such an event, using state-of-the-art climate models. This work overlaps with the case study described in the electrical power section, but it is not specific to the electrical power industry. Carried out in collaboration with the US National Centre for Atmospheric Research (NCAR), the study involved three steps: žž simulating the 2050 and 2090 storm žž assessing the storm surge žž calculating the extent of flooding Simulating the 2050 storm Using the Weather Research and Forecasting (WRF) model, we simulated the same key meteorological factors behind the real 2012 Sandy: an upper-level low-pressure system over the eastern US and the “blocking” ridge over Atlantic Canada. In 2012, these channelled the storm on its unusual path, with an impact angle at landfall nearly perpendicular to the coastline. To capture climate change, the temperatures of air and soil were raised by 2°C and 4°C, and the sea surface temperature by 0.6°C and 1.8°C for 2050 and 2090, respectively (Following IPCC projections for the high-emissions pathway RCP8.5). The simulated future Sandy track shifts slightly to the north and this leads to an even worse situation for

the New York area, as it faces a more intense part of the storm. As well as the storm track, the WRF model simulation gives us maximum wind speed, wind direction, pressure drop, and the radius of maximum wind, all of which form inputs for the storm surge modelling. Assessing the storm surge Using cutting-edge numerical models, DNV GL simulated how these future hypothetical storms would create a surge in the shallow sea off the New York and New Jersey coast. To validate the model, we performed a first run reproducing the real storm of 2012. The simulated surge heights correspond closely with stations measurements of sea level recorded during the event (Figure 16). For the 2050 and 2090 simulation, we included an increase of 0.45 metres and 0.90 metres in mean sea level, respectively, in accordance with IPCC estimates. Along some areas of the New Jersey and Long Island coast, high water levels reached around 7 metres and 9 metres above Mean Lower Low Water in the 2050 and 2090, respectively (Figure 17). This in comparison with about 4.5 metres measured for the 2012 storm. The simulated surge heights were used to calculate the inland flooding extent.






2090 Figure 17. Future Sandy landing on the East Coast of the US in 2050 and 2090. Red marks the storm surge. (Base map: US Dept of State Geographer - Š2013 Google - Image: Landsat Data: SIO, NOAA, U.S. Navy, NGA, GEBCO)







Calculating the extent of flooding The flooding assessment was performed with a dynamic flood routing model. On a grid of 10 metres resolution, the model numerically calculated the progress of the flood wave to predict the area of inundation. Flow over upslopes, flood wave attenuation, ponding and backwater effects were included. The maximum inundation is shown in Figure 18. Such detailed spatial information makes a powerful tool for assessing the number of people threatened and to create exposure maps. This can support decisions about flood protection measures and evacuation plans. This study emphasises the vulnerability of New York and other US East Coast cities to storm surge

flooding, and highlights the need for accurate information. Flood hazard in the region will only be aggravated as mean sea level continues to rise, while higher sea temperatures are likely to boost the power of storms. To reduce the risk of a future storm inflicting much greater losses even than 2012, adaptation measures should be explored both for structures and for emergency planning. We can learn from Sandy and improve our ability to respond in the future. The storm reminded us that community disaster response is a complex task that requires robust partnerships between state federal agencies, the private sector and civil society long before disaster arrives.

Vulnerability and Resilience: Case Studies 91

Š2013 Google - Image: Landsat

Figure 18. Flooding extent on Long Island caused by simulated Sandy in 2050 (light blue) and 2090 (dark blue) (Base map: Š2014 Google Street map)

TOWARDS A RESILIENT FUTURE To achieve a safe and sustainable future, we must safeguard social, environmental and economic systems. Climate change poses significant threats to infrastructure, human health and many economic sectors. It may result in setbacks and losses for business and society. Understanding the links between sustainability and climate change is vital to build resilience into communities and society at large. In this report we have identified key enabling strategies to help businesses improve their adaptation awareness and effectiveness.

One of these strategies is to share information and case studies, so that best practices can be scaled up within companies and carried across industries. DNV GL has developed an Adaptation Knowledge Platform to share information across different sectors and geographies. Another core strategy is to develop tools for decision-making, such as the DNV GL riskassessment framework described in this report. DNV GL will continue to collect and share adaptation knowledge while refining tools to facilitate sound, transparent decision-making in business.



REFERENCES Bitner-Gregersen, E.M., Eide, L.I., Hørte, T., and Skjong, R. (2013): Ship and Offshore Structure Design in Climate Change Perspective, Springer, ISBN 978-3-642-34137-3. Garrè, L., and Friis-Hansen, P. (2013): Using Bayesian Networks and Value of Information to Prioritize Adaptive Measures against Climate Change: An application of DNV’s ADAPT Framework for Risk-Based Adaptation. Submitted to 11th International Conference on Structural Safety and Reliability, New York, 16-20 June. Hagen, Ø., Garrè, L., and Friis-Hansen, P. (2013): DNV-ADAPT Framework for Risk-Based Adaptation: A Case Study for the Offshore Industry. Submitted to 11th International Conference on Structural Safety and Reliability, New York, 16-20 June. IPCC (2012): Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation. A Special Report of Working Groups I and II of the Intergovernmental Panel on Climate Change [Field, C.B., V. Barros, T.F. Stocker, D. Qin, D.J. Dokken, K.L. Ebi, M.D. Mastrandrea, K.J. Mach, G.-K. Plattner, S.K. Allen, M. Tignor, and P.M. Midgley (eds.)]. Cambridge and New York: Cambridge University Press. IPCC (2013): Fifth Assessment Report: Climate Change, Working Group I: The Physical Science Basis. Kaufman, G.G. and Scott, K.E. (2003): What Is Systemic Risk, and Do Bank Regulators Retard or Contribute to It? Independent Review 7 (3): 371–391. Leonard, H.B., and Howitt A.M. (2008): 'Routine' or 'Crisis' - The Search for Excellence. Crisis/Response Journal 4 (3): 32-35. Leonard, H.B.D., and Howitt A.M. (2010): Acting in Time Against Disaster: A Comprehensive Risk Management Framework. In Kunreuther, H. and Useem, M. (Eds.), Learning from Catastrophes: Strategies for Reaction and Response. Upper Saddle River, NJ: Wharton School Publishing.

Leonard, H.B.D and Howitt A.M. (2010): Advance Recovery and the Development of Resilient Organisations and Societies. In Woodward S. (Ed.), Integrative Risk Management: Advanced Disaster Recovery. Zurich: Swiss Reinsurance Company Ltd.: 45-58. Meadows, D.H. (2008): Thinking in Systems – A primer, Chelsea Green Publishing Company. Sheffi, Y. (2005): The resilient enterprise - Overcoming vulnerability for competitive advantage. MIT Press, Cambridge, Massachusetts. Sterman, J., Fiddaman, T., Franck, T., Jones, A., McCauley, S., Rice, P., Sawin, E., and Siegel, L. (2013): Management Flight Simulators to Support Climate Negotiations. Environmental Modelling and Software, 44, 122-135. Twigg, J. (2007): Characteristics of a disaster-resilient community: A guidance note. London: DFID DRR Interagency Coordination Group. Varnes, D.J. (1984): Landslide hazard zonation: a review of principles and practice. United Nations International, Paris. World Economic Forum (2013): Global Risks 2013. Eighth edition, Geneva, Switzerland. World Economic Forum (2014): Global Risks 2014. Ninth edition, Geneva, Switzerland.


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DNV GL Driven by its purpose of safeguarding life, property and the environment, DNV GL enables organisations to advance the safety and sustainability of their business. DNV GL provides classification and technical assurance along with software and independent expert advisory services to the maritime, oil & gas and energy industries. It also provides certification services to customers across a wide range of industries. Combining leading technical and operational expertise, risk methodology and in-depth industry knowledge, DNV GL empowers its customers’ decisions and actions with trust and confidence. The company continuously invests in research and collaborative innovation to provide customers and society with operational and technological foresight. DNV GL, whose origins go back to 1864, operates globally in more than 100 countries with its 16,000 professionals dedicated to helping their customers make the world safer, smarter and greener.

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Adaptation to a changing climate  

Our goal at DNV GL is to enable business and society to adapt to risks shaped by present and future climate. On this platform, we share insi...

Adaptation to a changing climate  

Our goal at DNV GL is to enable business and society to adapt to risks shaped by present and future climate. On this platform, we share insi...