Conduct the Strategy-Level Climate Risk Screening

Conducting the climate risk screening is the second phase of climate risk management for strategies, following planning for the screening.

C l i m a t e R i s k M a n a g e m e n t f o r S t r a t e g y D e s i g n a n d I m p l e m e n t a t i o n I . P l a n f o r S c r e e n i n g » « I I . C o n d u c t S c r e e n i n g R i s k s s s e s s R i s k s d d r e s s M a n a g e m e n t d a p t i v e l a n f o r « I I I . I n c o r p o r a t e R e s u l t s I V . I m p l e m e n t & M a n a g e » C R M f o r P r o j e c t s C R M f o r A c t i v i t i e s
Climate Risk Management for Strategy Design and Implementation: Phase 2.
The second phase of climate risk management for strategies is conducting the climate risk screening. Conducting the screening 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 screening consists of three interrelated steps:

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

Design teams have flexibility in the approach and resources they use to conduct the screening. 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. While missions can elect to use other approaches, the CRM tool has the added advantage of being similar in format to the mandatory table that must be included in the Climate Change Annex.

At the strategy level, missions are also required to assess the impacts of potential interventions on greenhouse gas (GHG) emissions. Such an assessment is intended to ensure that mission activities take advantage of opportunities to contribute to climate change mitigation as appropriate for the country context. This is further addressed below and in phase 3 on incorporating the assessment findings.

A. Assess Climate Risks and Opportunities

Assessing climate risks entails identifying and rating risks that could negatively affect the intended outcomes of the strategy, and considering opportunities to enhance results, build climate resilience, and reduce climate change causing greenhouse gas (GHG) emissions. For example, climate change is often viewed only as a stressor, but, in some places, rising temperatures may offer development opportunities by allowing for increased agricultural productivity.

In this step, it is important to carefully review relevant climate information. The climate risk profiles (CRPs) and USAID’s CRM Tool can help identify relevant risks and the in-country capacity to adapt to and manage those risks. Engaging the design team in a facilitated process allows for the consideration of multiple perspectives and diverse expertise. The GHG emission profiles available for many USAID partner countries, can help missions identify appropriate opportunities to support climate change mitigation.

Regardless of the approach and tools used, each climate risk identified must be rated as low, moderate or high. There is flexibility here: risks can be assessed at the development objective, intermediate result (IR) or sub-IR level.

Risk ratings are a function of the probability of negative impact and severity of the impact. Owing to the subjective and context-specific nature of these ratings, the design team has the primary responsibility for determining the appropriate rating for each risk identified based on their understanding of the relevant information and local context. When rating a risk, design teams should consider the in-country capacity to adapt to and manage these risks (which is often called adaptive capacity). The rationale for these ratings must be included in the mandatory Climate Change Annex.

Table: Risk Ratings

  Probability of Negative Impact
Low Moderate High
Severity of Negative Impact Low Low Risk Low Risk Low Risk
Moderate Low Risk Moderate Risk Moderate Risk
High Moderate Risk High Risk High Risk
Source: “USAID’s Definitions of Low, Moderate and High Climate Risk Ratings,” Climate Change in USAID Strategies: A Mandatory Reference for ADS Chapter 201

At times, the design team may identify potential risks for which not enough information is available to accurately rate that risk. In these circumstances, the team may recommend further assessments be conducted. The mission may also consider deferring an in-depth rating process until later in the program cycle when more information is available. However, at this stage the mission should give the risk a moderate or high rating and indicate when and how the more in-depth assessment will be conducted. This often occurs when the connections between the climate stressor and the identified risk are complex, or when the level of risk varies by geography or intervention type.

Design teams must also consider opportunities, which fall into three categories:

  • Achieving multiple development objectives or realizing co-benefits, such as reducing greenhouse gases;
  • 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

USAID guidance requires climate risks rated as moderate or high be addressed. Addressing climate risks that are rated low is optional. Therefore, as many USAID projects are developed under a specific IR, rating risks at the IR level can more easily identify those aspects of the mission’s strategy that may be at low risk, and thus not need to be assessed further during the program cycle.

USAID’s CRM Tool can help organize the design team’s collective expertise in a way that promotes the identification of feasible and cost-effective CRM measures.

Design teams generally have two options for addressing moderate and high risks:

  1. Integrate CRM measures into the strategy design.
  2. Defer the development of CRM measures until later in the program cycle. This is often the case when the appropriate CRM measures depend on geography or intervention type. Additional analyses can also be suggested to inform CRM at the project or activity design stage.

USAID guidance also states that, after careful consideration of potential tradeoffs, the assessment team can recommend accepting the risk(s). Accepting a risk is only recommended when the design team determines the objective at risk is essential to the success of the strategy, and the team is unable to identify a feasible way to manage that risk in a cost-effective manner.

In many cases, addressing climate risks does not require significant shifts in strategic approach. However, at other times, an identified risk may cause the design team to reconsider the scope or location of components of a strategy. Both small shifts and larger changes are more easily done early in the strategy development process.

Regardless of the method used to address risks, documentation of screening results must be included in the Climate Change Annex.

C. Plan for Adaptive Management

Many climate risks are inherently uncertain, and CRM should consider a realistic range of potential future climate scenarios. The design team should develop a plan for adaptive management that enables the mission or operating unit to track how climate risks are playing out over time and to make adjustments as needed. The Climate Risk Management: Monitoring, Evaluation, Learning and Knowledge Management guide can help with this process.