From Risk to Resilience: How to Conduct a Climate Risk Assessment for Your Business
(Even If You're Not a Climate Expert)
The cost of climate-related disasters is climbing fast, at roughly 5–7% each year. In 2025 alone, insured losses are projected to reach around $145 billion globally. And it’s not just about direct damage, like losing property to wildfires or floods. Climate impacts ripple across entire value chains, disrupting suppliers, operations, and customers in ways that will inevitably affect all industries.
For rural founders—whether you’re an outdoor retailer or a scaling tech startup—you are not immune.
“There are tangible fundamentals of business longevity that stem from climate change,” Max Nathanson, a climate preparedness and economic development expert in Boulder, Colorado said. “First and foremost, there is the risk management component that can mean the survival of your business. On the other hand, there are opportunities that entrepreneurs may not see right away.”
So, how do you prepare your business for the impacts of climate change? A climate risk assessment (CRA) is the first step in identifying, understanding, and developing a strategy for your business.
We spoke with Max Nathanson, a Colorado native who recently received his DPhil (PhD) from the University of Oxford. He has a decade of experience working on climate resilience, economic development, and national security in state and federal government.
What is a Climate Risk Assessment?
A climate risk assessment (CRA) is a living document that helps businesses identify and understand how environmental factors may impact their operations. It evaluates your company’s exposure and vulnerability to climate-related risks and provides a foundation for developing strategies to manage and adapt to those challenges.
“For a risk assessment to be useful and effective, it doesn't need to be a highly scientific, technical document,” Max said. “You can even think about using qualitative terms to assess exposure and risk, like green, yellow, red.”
Taking the time to develop a CRA gets you off your back foot and positions you to be proactive. And the effort pays off—companies investing in climate adaptation are already seeing returns of $2 to $19 for every dollar spent.
Before we dive in, rest assured—we’re not expecting founders to become environmental scientists overnight. These steps will help you use existing resources to create a practical, working document that can evolve alongside your business.
Step 1: Identify Climate Impact Risks
Most founders should be able to identify at least a few immediate climate risks. In Colorado, these often include drought, extreme heat, wildfire, and flooding. Take a minute to jot down the initial impacts that come to mind. Think about the location of your office(s), storefront(s), warehouses, manufacturing facilities, and workforce. Then, identify your key vendors and suppliers, and determine their climate risks.
You’ll also want to identify transition risks—i.e., the potential costs and challenges of adapting to a low-carbon economy. These can include policy and regulatory changes (we’ll cover how international regulations can affect U.S. companies below), rising insurance costs, investments in new technologies, and shifting market dynamics as consumer behaviors evolve in response to climate change.
“Start with what is already happening, and take as deep a dive as possible into what that risk actually looks like,” Max said. “Look at recent events and local history. Talk to people in your network and your community. Talk to vendors and suppliers, your employees and partners.”
For companies with few physical assets, like service providers or early-stage SaaS startups, it’s important to think beyond your immediate footprint. Consider how climate hazards could impact your target customers and their ability to purchase your products or services. Review the locations of your data centers and remote workforce to assess potential vulnerabilities.
Step 2: Understand Your Vulnerability and Exposure
Consider the potential impacts on your day-to-day operations, growth plans, employee recruitment and retention, funding, and more. This is where that simple red-yellow-green scale can be helpful: review each risk you’ve identified and score it based on the level of threat it poses to your company, both now and in the future.
For example, let’s say you’re the founder of a nutrition bar company that manufactures locally and exports nationally. A prolonged drought in regions where your ingredients are sourced could drive up costs, while increased wildfire risk near your manufacturing facility could disrupt production. On top of that, extreme weather events in other parts of the country might delay shipping or limit access to certain markets.
Step 3: Develop Mitigation Strategies
Here’s the thing about CRAs: you need to use them. Use your learnings to guide decision-making across all levels of your business. By evaluating both the severity and likelihood of each risk, you can prioritize where to focus your resources.
Build climate resilience into your physical operations. For some businesses, this might mean investing in water-efficient equipment or fire-resistant infrastructure. For others, it could involve preparing for regulatory changes, aligning marketing strategies with climate-conscious consumers, or diversifying suppliers to reduce exposure to regional disruptions.
Your findings can inform workforce planning, such as training employees for extreme weather scenarios or updating safety policies for rising heat risks. In addition to savings from reducing short-term operational impacts, strategic planning can lower long-term costs from healthcare and other ‘soft’ costs. It can also shape your growth strategy: if your CRA highlights vulnerabilities in certain markets, you might adjust expansion plans or rethink distribution models.
“In particular, ensuring continuity of operations can be a massively overlooked competitive advantage, especially for small margin, early stage businesses,” Max said.
Tools for Conducting a Climate Risk Assessment
In addition to leveraging your network, here are some climate risk tools Max recommends. He also suggests taking advantage of the recent influx of highly qualified climate and supply chain professionals entering the private sector as a result of federal workforce shifts. You can explore their services via Beech Tree.
Climate Explorer – Explore past, present, and projected future climate conditions for specific locations.
ThinkHazard! - Identifies natural hazard levels for any location.
FEMA Resilience Analysis and Planning Tool - Allows users to overlay census demographics, infrastructure locations and hazard layers to produce community‑specific maps.
World Bank Climate & Disaster Risk Screening Tool – Assess potential climate and disaster risks for projects and investments.
First Street – Provides climate risk data and financial modeling, including flood, fire, and heat exposure.
Colorado EnviroScreen – Identifies environmental and climate-related risks specific to Colorado.
Wildfire Risk to Communities - Offers interactive maps, charts and resources to help communities understand, explore and reduce wildfire risk.
The Importance of Thinking Globally
Climate change is a global problem. Regardless of the current regulatory environment in the United States, other nations—notably the European Union—are continuing to implement ESG policies. Whether you have plans to scale, source products, or seek funding internationally, having a solid understanding of your company’s climate risk exposure is essential.
Familiarize yourself with international regulations like the EU’s Ecodesign for Sustainable Products Regulation (ESPR), Corporate Sustainability and Reporting Directive (CSRD), and EU textile rules, as well as reporting frameworks such as ISSB and TCFD, which underpin many regulations worldwide, including the SEC’s climate disclosure rule if reinstated.
Because of continued decarbonization and circular economy efforts abroad, there may be opportunities for founders.
“If you’re conducting global business in the European Union, for example, there are still lots of climate incentives and opportunities on the books that may not have been on your radar,” Max said.
Using a CRA to Identify Opportunities
Viewing markets through a climate risk lens can be a powerful strategy for identifying both new opportunities and potential areas for expansion. It’s a practical way to assess where and how your business might grow in a changing environment.
Potential opportunities could include:
Product Innovation & Market Expansion - A CRA may highlight growing vulnerabilities in certain markets that could align with your product or inform a pivot to meet emerging needs.
Strategic Partnerships and Funding Access - By mapping out climate risks across your operations and supply chain, a CRA can reveal areas where collaboration creates value. Additionally, demonstrating a proactive CRA can make your business more appealing to impact investors and grant programs focused on climate adaptation and resilience.
Competitive Advantage Through Sustainability - Understanding transition risks—like evolving climate policies or shifting consumer preferences—can uncover opportunities to differentiate your brand. By highlighting your proactive approach to climate challenges, you can position your business as a forward-thinking leader and stand out from competitors.
“At the end of the day, aligning your CRA with your journey, with your vision, with who you are as a founder—as a business—and making it part of the story you're telling in a really grounded way, can lend opportunities that you may not have anticipated,” Max said.
Join us at this year’s West Slope Startup Week, Oct. 6–10 in Durango, for the launch of our inaugural Climate Track—a series of sessions designed for business leaders exploring climate innovation and founders looking to build more resilient businesses.
Learn more and register here.
This newsletter is powered by Startup Colorado. We believe that anyone should have the ability to start and scale a business in the place they call home. And in Rural Colorado, we’re seeing the power of entrepreneurship transform communities and lives, proving that the spark of innovation can—and should—be kindled outside urban hubs.
Written by Margaret Hedderman, Director of Content & Brand Strategy at Startup Colorado, with support from Max Nathanson.