Conduct the Project-Level Climate Risk Assessment

Conducting the climate risk assessment is the second phase of climate risk management for projects, following planning for the assessment.

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Climate Risk Management for Project Design and Implementation: Phase 2.
The second phase of climate risk management for projects is conducting the climate risk assessment. Conducting the assessment involves assessing risks, addressing risks, and planning for adaptive management. You may navigate this graphic to jump directly to the specific steps of conducting the assessment, or to jump to other phases of the CRM process.

Conducting a climate risk assessment consists of three interrelated steps:

  1. Assess Climate Risks and Opportunities
  2. Address Climate Risks
  3. Plan for Adaptive Management

The assessment also involves consideration of opportunities to enhance results and build climate resilience.

Assessment teams have flexibility in the approach and resources they use to conduct the assessment. Using USAID’s Climate Risk Screening and Management Tool (CRM Tool) provides a systematic framework to help teams assess and address risks holistically. The tool’s sector-specific annexes provide examples of climate risks, CRM measures, and opportunities.

A. Assess Climate Risks and Opportunities

Assessing climate risks entails identifying and rating climate risks that could negatively affect the project’s outcomes, and considering opportunities to enhance results and build climate resilience.

In this step, it is important to review climate information relevant to the project’s geography and the time frame over which the project’s benefits should be sustained to ensure the assessment is based on an understanding of recent and expected climate impacts. The Climate Risk Profiles and USAID’s CRM Tool can help identify relevant risks and adaptive capacity. Engaging the assessment team in a facilitated process allows for the consideration of multiple perspectives and diverse expertise.

Regardless of the approach and tools used, each climate risk identified for each project element must be rated as low, moderate or high. (Note that there is flexibility regarding project elements. The team may assess risks to: the project purpose, sub-purpose, area of focus, or the activities contributing to the overall project objectives). Risk ratings are a function of the probability of negative impact and severity of the impact, keeping in mind adaptive capacity.

Assessment teams must consider opportunities, which fall into three categories:

  • Achieving multiple development objectives including reducing greenhouse gas emissions;
  • Taking advantage of “windows of opportunity” created by the local/national context, e.g., laws, policies, attitudes, and interests of stakeholders; and
  • Opportunities created by the changing climate.

B. Address Climate Risks

Addressing climate risks entails identification of measures to manage risks.

USAID guidance requires climate risks rated as moderate or high to be addressed. Addressing climate risks rated low is optional. USAID’s CRM Tool can help assessment teams select the most feasible and cost-effective CRM measures for project design and implementation.

Assessment teams have two options for addressing moderate and high risks:

  1. CRM measures can be integrated in project design.
  2. CRM measures can be identified through additional analyses or in further steps taken before or during activity design and implementation.

USAID guidance states that, after consideration of tradeoffs, assessment teams also can recommend accepting the risk(s). By accepting a risk, the assessment team acknowledges that it could not identify a feasible way to manage a climate risk that could negatively affect project results.

Importantly, based on the climate risks, the project design team can choose to change the scope or location of the project, or for unknown locations add conditions, prior to implementation of the project to reduce or avoid climate risk.

Regardless of the method used to address risks, design teams must include assessment results in project appraisal documents (PADs) and environmental compliance analyses.

C. Plan for Adaptive Management

When determining how to address the climate risks, the assessment team should develop a plan for how to adaptively manage during implementation to ensure the CRM measures are effectively addressing risks. This is a particularly important aspect of planning under uncertainty. The Climate Risk Management: Monitoring, Evaluation, Learning and Knowledge Management guide can help with this process.