Corporate Climate Risk Assessment and Management

A climate stress test built for companies. It takes the climate scenarios a firm is exposed to, follows them through its operations, suppliers and customers, and reports the result in the terms a board and a CFO use: revenue, operating cost, margin, cash flow and the cost of capital.

The initiative applies the causal-loop structure of Landscape Advisory's national stress-test model, CST26, at the level of the firm. El Niño drought, fire and haze, La Niña rainfall, floods and landslides, and transition shocks such as carbon pricing and disclosure requirements are each run through the same chain: from the physical or policy event, to the assets and supply routes it touches, to the second-round effects on prices, demand and financing. Adaptation and mitigation measures are then tested against the baseline, so each option is shown with its cost and the loss it avoids.

The output is a risk register with numbers attached, a set of costed management options, and the basis for climate disclosure that investors, lenders and regulators can rely on.

Climate risk rarely arrives where a company is watching for it. The direct damage to a plantation, a mine or a plant is usually the smaller part of the cost; the larger part comes through the indirect wave.

Fire in the Horizon shows this at national scale: in the 2026 super El Niño the indirect effects through food prices, transport, power, trade and public finances cost more than the scorched fields. The same holds inside a company. A drought that cuts hydropower output raises energy costs for a smelter hundreds of kilometres away. Haze closes airports and ports and delays shipments. Floods cut roads that a distribution network depends on. Higher food prices and interest rates weaken consumer demand at the same time that input costs rise.

These effects compound, and they rarely appear in a conventional risk matrix that scores hazards one at a time. A company that sees only its direct exposure will underestimate the hit to earnings, react late, and pay more for insurance and capital than one that can show it has measured and managed the full chain.

Transition risk adds to this. Indonesia's carbon market framework was reset by Perpres 110/2025, emission caps and carbon pricing are extending across sectors, buyers in export markets are applying deforestation and carbon border rules, and climate disclosure based on IFRS S2 is moving from voluntary to expected. Each of these turns emissions and land-use exposure into a cost line, a market-access condition or a financing term.