Climate risk
you can decide on.

What climate risk means for a council or agency

Physical risk is damage and disruption from the climate itself, acute during an event and chronic as baseline conditions shift. Transition risk comes from the response: policy and regulation, legal action, technology, markets and reputation. Physical risk dominates the asset conversation; transition risk shows up in procurement and grant conditions. Higher insurance premiums on assets in hazard zones are mainly a financial effect of physical risk. The hazards in scope are wider than most registers admit:

• Flooding and stormwater, including drainage capacity and tailwater levels where a catchment meets the coast.
• Heat and urban form: heatwave duration, canopy cover, surface materials and vulnerable residents.
• Coastal erosion, storm tide and tidal inundation, entrance behaviour and coastal groundwater.
• Transport and critical infrastructure, including evacuation routes and dependencies on power and telecommunications.
• Water and services: supply security, treatment capacity, sewer overflow and waste operations.
• Built assets and precincts, and the renewal programme that quietly sets your adaptation timetable.

Going from projections to a decision

Projections describe plausible futures under emissions scenarios. They do not tell you what to do. Start at the decision and work backwards. Name the decision, its owner and its window, ask what would have to be true for one option to beat another, then ask the projections only for what changes that answer. Many decisions are insensitive to a large part of the uncertainty.

The Australian Government is developing a set of national downscaled climate projections with state and territory governments, CSIRO, the Bureau of Meteorology, universities and the Australian Climate Service. The National Partnership for Climate Projections, a voluntary collaboration of governments and science bodies working together since 2022, helps coordinate that work. National projections were updated in 2025 and are published on the Climate Change in Australia website, and several states publish their own. Record which scenarios and which vintage you used in the decision record.

Exposure, vulnerability, consequence, criticality, materiality

Five words do most of the work, and risk registers stall when they are mixed together.

• Exposure. What is in the way: people, assets, services and land inside the hazard footprint.
• Vulnerability. How badly the exposed thing fares. A 1960s pump station and a new one in the same flood extent differ sharply.
• Consequence. What follows if it fails: repair cost, service outage, safety, environmental harm, legal position.
• Criticality. How much depends on it. A low-value asset carrying the only evacuation route is critical whatever its book value says.
• Materiality. Whether the consequence is large enough to change a decision at your level. A risk can be real, well evidenced and immaterial to the choice in front of you. This is a decision test, and it differs from the accounting meaning of material information in financial reporting.

Compound and cascading conditions

A compound condition is two or more hazards arriving together, or in close sequence, so the outcome is worse than either alone. Heatwave during a network outage. Catchment flooding on a high tide. A cascading condition is a failure that propagates: power, then pumping, then telemetry, then treatment, with the failure outliving the weather. Registers built one hazard at a time miss both.

Australia's first National Climate Risk Assessment was built on that logic. Developed by the Australian Climate Service, a partnership of the Bureau of Meteorology, CSIRO, the Australian Bureau of Statistics and Geoscience Australia, its first pass identified 56 nationally significant risks and its second pass analysed 11 priority risks across seven key systems. The final report was released in September 2025. It found that, if populations stayed where they are today, about 1.5 million people would be living in high or very high-risk coastal areas by 2050, up from about 600,000 in 2030.

Options, trade-offs, and pathways with triggers

An adaptation option is anything that lowers exposure, vulnerability or consequence, or buys time. Comparing options honestly means writing down what each costs, what it does to the risk, what it forecloses, and who carries the downside. Co-benefits are why many get funded: canopy cover cuts heat exposure while improving amenity and stormwater performance.

A pathway sequences options over time instead of picking one now and defending it forever. Commit to a first step that performs acceptably across scenarios, identify the conditions under which it stops being sufficient, and pre-agree what comes next. That condition is a threshold. The point at which you must start acting to be ready in time is the trigger, and it sits earlier by however long the next step takes.

The decision then hangs on a monitored condition and an agreed response, so new information moves the timing and leaves the choice intact.

Governance, funding, residual risk and monitoring

The analysis is the easy half. What holds a plan together is the plumbing under it.

• Governance. Name the decision owner, the approval path and where the risk sits on the register. An action with no owner and no line in a delivery programme is a statement of intent.
• Funding. Separate the cost of the study, the first step and the whole pathway. Councils draw on rates, renewal budgets, state grants and Commonwealth programmes delivered through the states, such as the Disaster Ready Fund.
• Residual risk. What remains after the option is delivered. Write it down, quantify it where you can, and have someone accept it explicitly.
• Monitoring. Indicators tied to your thresholds, a named reader, a frequency, and a review date. Monitoring with no trigger attached is data collection.

Climate risk reporting: where local government sits

The Australian Accounting Standards Board made AASB S2 Climate-related Disclosures under section 336A of the Corporations Act 2001. It applies to annual reporting periods beginning on or after 1 January 2025, and the Corporations Act specifies three application dates: financial years beginning on or after 1 January 2025, 1 July 2026 and 1 July 2027.

ASIC's position is that an entity must prepare a sustainability report if it must prepare an annual financial report under Chapter 2M of the Corporations Act and meets a threshold in section 292A. Those thresholds cover corporate size, obligations under the National Greenhouse and Energy Reporting Act 2007, and a value of assets test.

Australian councils are constituted under state local government legislation and report under it, so they generally sit outside the Chapter 2M regime AASB S2 attaches to. That describes which reporting law applies to a council itself, and it is no guide to your own position. Entities inside a council group can fall under different rules. Some state governments have introduced or are developing climate disclosure requirements for their own public sector entities, and the AASB is researching how AASB S2 might apply to local government, so check with your state's local government department. Grant conditions and insurer questions ask for climate risk information regardless.

Agencies sit under separate rules: Commonwealth entities report under the Department of Finance's Commonwealth Climate Disclosure requirements, and NSW Group 1 agencies under Treasury policy TPG24-33. Check the rule for your jurisdiction.

Whatever regime reaches you, the framework behind it has four parts: governance, strategy, risk management, and metrics and targets. A sound adaptation process already produces much of the governance, strategy and risk management material. AASB S2 also asks for greenhouse gas emissions and financial effects, which adaptation work does not cover.

Questions