Climate Risk Integration: The Strategic Advantage of Enhanced ERM Frameworks

Climate change is already costing the U.S. healthcare sector billions annually - from infrastructure damage to supply chain disruptions and rising operational expenses. Extreme weather events, such as hurricanes, tornadoes, and heat waves, are not only straining healthcare systems but also threatening patient care and community health.

Key Takeaways:

• U.S. climate-related health costs exceed $800 billion annually, with healthcare contributing 8–9.8% of national emissions.
• Hospitals face risks like power outages, damaged facilities, and supply shortages during extreme weather.
• Early climate risk planning can reduce costs, improve resilience, and protect vulnerable populations.

Actionable Steps for Healthcare Organizations:

1. Incorporate Climate Risks into ERM: Assess risks (physical and transition), track metrics, and integrate climate factors into existing systems.
2. Strengthen Resilience: Invest in sustainable infrastructure, on-site energy solutions, and diversified supply chains.
3. Collaborate with Communities: Partner with local governments, public health agencies, and community groups to address climate-related emergencies.

Every dollar spent on resilience measures returns $4–5 in benefits. Acting now ensures healthcare systems remain operational while addressing health equity and protecting communities from climate impacts.

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Why Climate Risk Matters for ERM

Since January 2023, the U.S. has experienced 25 weather and climate disasters, each causing over $1 billion in losses ^[4]. For healthcare organizations, these events go beyond financial losses - they disrupt patient care and threaten the core of healthcare delivery. Here's a closer look at how these risks affect operations.

How Climate Events Affect Healthcare Operations

• Infrastructure Damage: In March 2023, Sharkey Issaquena Community Hospital in Rolling Fork, Mississippi, faced severe damage. A tornado destroyed its emergency room, damaged the roof, and left critical equipment unusable ^[4].
• Supply Chain Disruptions: After Hurricane Maria, a manufacturing plant in Puerto Rico - responsible for supplying 50% of U.S. hospitals with saline bags - was damaged, leading to a nationwide shortage ^[4].
• Patient Care Interruptions: Extreme weather in 2023 forced several healthcare facilities to halt operations. For example, Tropical Storm Hilary flooded a California hospital's emergency room, while Hurricane Idalia led to patient evacuations in Florida hospitals ^[4].

Healthcare facilities are particularly vulnerable due to their high energy use - accounting for over 10.3% of all electricity consumed in the U.S. ^[2] - and their contribution to 8.5% of domestic emissions ^[4]. This reliance on energy makes them especially prone to power outages during extreme weather.

The Case for Early Climate Risk Planning

"Climate risks to health care infrastructure threaten community health and health care facilities' financial viability." – Center for American Progress ^[4]

Taking early steps to address climate risks strengthens healthcare operations, manages costs, and protects community health:

• Operational Resilience
  Facilities can continue providing critical services during extreme weather. For example, CrescentCare in New Orleans installed a solar microgrid to ensure operations during power outages, transforming itself into a "resilience hub" ^[4].
• Cost Management
  The CDC estimates that climate change could add $2 billion to healthcare costs by 2030 due to air pollution, heat waves, wildfires, and extreme weather ^[2]. Investing in measures like energy efficiency, renewable energy, infrastructure upgrades, and diversified supply chains can help curb these expenses.
• Community Health Protection
  Extreme heat alone leads to nearly 7,000 additional emergency room visits and around 2,000 heat-related hospital admissions each summer ^[4]. Organizations with solid climate risk strategies are better equipped to handle these surges while maintaining care quality.

"With longer allergy seasons, my patients with asthma are having more attacks, and the poor and elderly cannot afford the additional medication and utility costs. Extreme weather events filled with uncertainties about safety affect our mental health. Health professionals are respected. Including our voices would be extremely valuable. Climate solutions are health solutions!" – Cheryl M. Holder, M.D., program director of Neighborhood HELP Education and Pipeline Program; and Associate Professor at the Herbert Wertheim College of Medicine ^[2]

Steps to Add Climate Risk to ERM

Healthcare organizations can strengthen their ability to handle challenges by including climate risks in their Enterprise Risk Management (ERM) frameworks. This process builds on existing systems while factoring in climate-related concerns.

Identifying and Assessing Climate Risks

The first step is to perform a climate risk assessment. This involves evaluating two main types of risks:

• Transition Risks: These stem from policy changes and market shifts toward a low-carbon economy.
• Physical Risks: These relate to environmental changes, such as extreme weather and rising sea levels.

Key areas to examine include:

• Infrastructure Vulnerability: Check how facility locations align with regional climate forecasts for temperature, rainfall, and sea level changes.
• Supply Chain Exposure: Assess where suppliers are located and identify possible disruptions from severe weather.
• Regulatory Compliance: Keep track of new climate-related policies that might impact operations.
• Resource Dependencies: Analyze critical needs like energy and water usage.

Data and Metrics Needed

To properly assess climate risks, organizations require specific data and measurements. Here’s a breakdown:

Incorporating Climate Risks into ERM

Following the guidelines from the Task Force on Climate-Related Financial Disclosures (TCFD) ^[5], the process involves three main steps:

1. Risk Identification and Assessment

Pinpoint climate-related risks by analyzing both immediate threats and long-term challenges that could affect healthcare delivery.

2. Integration with Current Systems

Rather than creating separate frameworks, climate risks should be embedded into existing ERM categories. This could involve adding a "climate multiplier" to current risk assessments or introducing specific climate-focused risk categories ^[1].

3. Implementation and Monitoring

"Embed climate-related risks into the existing Enterprise Risk Management and strategy development processes." ^[5]

This step includes creating response plans and setting up ongoing monitoring systems. Key actions involve:

• Developing metrics to track progress
• Establishing a baseline greenhouse gas inventory
• Setting decarbonization goals
• Scheduling regular review cycles

Healthcare organizations should also use climate scenario analyses to anticipate future challenges and refine their strategies. These efforts lay the foundation for reducing climate risks through targeted actions.

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3 Methods to Reduce Climate Risk

Healthcare organizations can take practical steps to address climate-related risks while improving their ability to operate under challenging conditions. Here are three effective approaches.

Reducing Carbon Output

Healthcare facilities can lower their carbon footprint by making targeted changes to how they manage resources and operations. Key focus areas include:

Strengthening Against Climate Impacts

To keep essential services running during extreme weather, healthcare facilities need to strengthen both their physical structures and their operational systems. Critical steps include:

1. Infrastructure Assessment: Review facility locations based on regional climate risks and upgrade systems accordingly.
2. Resource Independence: Install on-site power and water storage to ensure continuity during outages.
3. Supply Chain Resilience: Diversify suppliers and stockpile essential materials to reduce disruptions.

For instance, Boston Medical Center invested $15 million in a combined heat and power plant back in 2017. This upgrade not only improved energy efficiency but also ensured the hospital could continue operating during severe weather events ^[6].

Turning Climate Challenges into Opportunities for Better Care

Healthcare organizations can use climate challenges to enhance both patient care and operational efficiency by weaving climate considerations into their practices. Some practical steps include:

1. Improved Patient Screening
   Introduce universal screenings to identify patients vulnerable to environmental health risks before climate events occur.
2. Adapting Services
   Build out virtual care options to keep services running smoothly during disruptions.
3. Community Collaboration
   Team up with local organizations to create coordinated plans for responding to climate-related health emergencies.

These proactive measures not only improve patient care but also strengthen community preparedness, complementing broader public health efforts to manage climate risks.

Public Health and Climate Risk Response

Working with Local Partners

Healthcare organizations play a key role in strengthening community responses to climate challenges. By collaborating with local governments, universities, community groups, and public health agencies, they can create networks designed to protect public health during climate-related emergencies. These partnerships also help integrate broader risk management strategies into community-wide efforts.

Recent data reveals that 81% of clinics experienced disruptions from extreme weather over the past three years, yet fewer than 20% felt adequately prepared ^[8]. Partnerships like these extend risk management strategies to support communities more effectively.

One example of collaboration comes from December 2021, when Health Care Without Harm organized an extreme heat preparedness exercise in Springfield, Massachusetts. This event brought healthcare providers and community partners together to identify support systems and improve emergency response plans ^[9].

"Addressing environmental sustainability and climate is critical for enhancing population and public health. In fact, the goals of environmental sustainability and climate action are inherently aligned with the quintuple aim. They also share a common path to success through intentional partnerships." - Fahmida Bangert ^[7]

Ensuring Equal Access During Climate Events

Climate-related disasters often hit vulnerable populations the hardest, highlighting the need for equitable healthcare access. While partnerships improve overall readiness, targeted strategies are crucial to ensure vulnerable groups are not left behind. For example, in 2022, Latino and Black households faced higher displacement rates from extreme weather - 1.8% and 2.2% respectively - compared to 1.2% for white households.

Boston Medical Center is addressing these inequities through its Clean Power Prescription program, which helps select patients transition to renewable energy sources and lower their utility costs.

Key actions to promote equitable access include:

• Infrastructure Improvements
  • Upgrade emergency power systems
  • Enhance communication networks
  • Install flood protection measures
• Community-Focused Support
  • Provide multilingual outreach during emergencies
  • Deploy mobile healthcare units
• Resource Allocation
  • Stockpile essential supplies in high-risk areas
  • Set up backup care locations
  • Maintain emergency transportation options

These efforts align with the operational safeguards discussed earlier. Additionally, the Joint Commission and CMS will introduce voluntary climate reporting standards in January 2026. These guidelines will help healthcare providers identify gaps and develop strategies to maintain equitable care during climate events.

"Health equity requires every organization to understand the sources of structural inequity and pair up remedies one at a time for solutions that are deep and effective." - Fahmida Bangert ^[7]

Conclusion

Incorporating climate risk into ERM (Enterprise Risk Management) frameworks is becoming a crucial step for healthcare organizations. Climate-related health costs in the U.S. already exceed $1 trillion each year, and future projections are staggering: 14.5 million deaths and $12.5 trillion in economic losses by 2050. On the bright side, every dollar spent on resilience measures returns $4 to $5 in benefits ^[3].

Three key elements are essential for successfully addressing climate risks:

• Strategic Integration: Embedding climate-related risks into ERM frameworks allows organizations to identify potential threats early and allocate resources more effectively ^[10].
• Cross-Functional Collaboration: Breaking down silos across departments ensures a coordinated response to climate challenges. This is especially important since patient care alone contributes over 40% of healthcare emissions ^[3].
• Community Partnership: Collaborating with local stakeholders not only boosts resilience but also tackles health equity issues.

These components create a framework that promotes operational stability while improving community health. The growing public demand for stronger climate-health protections means healthcare organizations must align their risk management strategies with environmental and community priorities.

Addressing climate risk isn’t just about managing threats - it’s about improving healthcare systems, protecting vulnerable populations, and ensuring a more resilient future for everyone.

FAQs

How can healthcare organizations incorporate climate risks into their Enterprise Risk Management (ERM) frameworks to enhance resilience and sustainability?

Healthcare organizations can effectively incorporate climate risks into their ERM frameworks by identifying and prioritizing climate-related threats, such as extreme weather events or regulatory changes, and embedding them into their existing risk management processes. This ensures that climate risks are treated as integral to overall operational security.

Organizations should also conduct forward-looking risk assessments using climate data to anticipate potential impacts and develop actionable plans. These plans may include infrastructure evaluations, collaboration across departments, and strategies to reduce vulnerabilities. Additionally, integrating climate resilience and sustainability into governance structures and strategic planning can help align organizational goals with long-term environmental and operational priorities.

Finally, setting measurable targets, such as reducing greenhouse gas emissions, and tracking progress can enhance transparency and accountability. Proactive measures like switching to renewable energy or improving energy efficiency not only mitigate risks but also provide cost-saving and strategic advantages.

What practical steps can healthcare facilities take to lower their carbon footprint and improve resilience to climate change?

Healthcare facilities can take several effective steps to reduce their carbon footprint and strengthen resilience to climate impacts. Start by assessing vulnerabilities in infrastructure, energy systems, and supply chains, and address any weaknesses to enhance operational security. Transitioning to renewable energy sources and improving energy efficiency are impactful ways to reduce emissions.

Additionally, facilities can minimize waste, streamline care delivery processes, and work with suppliers to lower indirect emissions. Developing a climate resilience plan is also key - this includes identifying climate risks, engaging with the community, and collaborating with other healthcare organizations. Setting clear emissions targets, implementing governance structures, and tracking progress will help ensure meaningful and measurable results over time.

Why should healthcare organizations work with local communities and stakeholders to tackle climate-related challenges?

Healthcare organizations should collaborate with local communities and stakeholders to effectively address climate-related challenges because these issues often impact vulnerable populations the most, such as children, older adults, people of color, and low-income groups. By engaging with local partners, healthcare systems can better understand community-specific risks and develop targeted strategies to mitigate them.

Collaboration also strengthens a healthcare organization's ability to respond during climate-driven crises, like heatwaves, hurricanes, or flooding. Working together ensures that resources, expertise, and support are aligned to protect public health and maintain care delivery when it's needed most. Building these partnerships fosters resilience and helps create sustainable, long-term solutions.

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