Nature of Risk

The report establishes a framework for nature-related risk (NRR), defining it as the result of changes in a business's dependencies on or impacts on nature that become threats due to the company's exposure and vulnerability. It identifies five primary risk types: physical, regulatory & legal, market, reputational, and financial. Through a review of over 70 sources, the report highlights that sectors such as food and beverage, metals and mining, and oil and gas face the highest risks. Case studies of BP, Vale, PG&E, and German exporters illustrate how these risks materialize into multi-billion dollar liabilities, bankruptcy, or lost revenue.

• Nature-related risk (NRR) emerges when changes in a business's dependencies on nature (reliance on ecosystem services) or its impacts on nature (positive or negative effects) create a threat that becomes financially material based on the company's exposure and vulnerability.
• The report categorizes nature-related risks into five major types: physical, regulatory & legal, market, reputational, and financial. While the first four are viewed as threats, financial risks are typically the consequences of those threats.
• A review of 30 frameworks identifies the food and beverage, metals and mining, oil and gas, utilities, forestry, construction, and transportation sectors as those facing the greatest nature-related risk, while telecommunications is consistently identified as low risk.
• Nature-related risks and climate-related risks are deeply interconnected, described as "twin emergencies" where nature loss reduces climate resilience and climate change accelerates the drivers of nature loss.
• The BP Deepwater Horizon oil spill demonstrates how a company's negative impact on nature can lead to massive regulatory and legal costs, with ultimate fines estimated between USD 62.59 billion and 144.89 billion.
• The collapse of Vale's Brumadinho dam in Brazil illustrates physical risk leading to severe financial and legal consequences, including the freezing of USD 2.3 billion in assets and a single-day market value loss of USD 19 billion.
• The case of German food exporters in South Africa shows how dependency-related risks, such as water scarcity and drought, can cascade through supply chains, resulting in EUR 70 million in forgone sales and profits for the exporters.
• The bankruptcy of PG&E in 2019 exemplifies how climate-driven environmental conditions (increased dryness) combined with poor risk management (faulty equipment) create physical risks that can lead to insolvency, with liabilities exceeding USD 30 billion.
• The report identifies several business opportunities in addressing nature-related risk, including improved resource efficiency, first-entrant advantages in nature-friendly markets, and better access to 'green' investment funds through impact assessments.

APA

McCraine, S., Anderson, C., Weber, C., & Shaw, M. R. (2019). Nature of Risk. WWF International. https://www.worldwildlife.org/documents/711/8t5tn2hsfl_WWF_Nature_of_Risk.FINAL2.pdf

Chicago

McCraine, Samantha, Christa Anderson, Christopher Weber, and M. Rebecca Shaw. Nature of Risk. WWF International, 2019. https://www.worldwildlife.org/documents/711/8t5tn2hsfl_WWF_Nature_of_Risk.FINAL2.pdf.

Wikipedia

{{cite report |last1=McCraine |first1=Samantha |last2=Anderson |first2=Christa |last3=Weber |first3=Christopher |last4=Shaw |first4=M. Rebecca |title=Nature of Risk |publisher=WWF International |date=2019 |url=https://www.worldwildlife.org/documents/711/8t5tn2hsfl_WWF_Nature_of_Risk.FINAL2.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mccraine2019nature, author = {McCraine, Samantha and Anderson, Christa and Weber, Christopher and Shaw, M. Rebecca}, title = {{Nature of Risk}}, institution = {WWF International}, year = {2019}, url = {https://www.worldwildlife.org/documents/711/8t5tn2hsfl_WWF_Nature_of_Risk.FINAL2.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }