Most of the changes illustrated present both risks and opportunities. In forestry, for instance, increased temperatures and rainfall will mean faster tree growth, but since transport from within the forest is easier when the ground is frozen solid, the harvesting period may shorten. Increased precipitation might be good for hydropower, but not if it is unevenly distributed throughout the year, since energy from wet seasons cannot be stored to make up the shortfall in a drought.
The melting of the polar ice cap is another current phenomenon. At the time of writing (September 2011), the Northern Sea Route – a shortcut to South East Asia through the Barents Sea and along the coast of Siberia – is open. The extent of ice in the Arctic Sea has declined towards record lows in 2011, and the decline over recent decades appears to be confirmed.9
Shipping firms, particularly Nordic ones with long experience of sailing icy waters, see this as an emerging opportunity over the next decade or so. Others, such as security and defence contractor SAAB, see opportunities of a different kind: providing protection against the inevitable security concerns that will arise if the route does become a major one for global trade.
Similarly, oil and gas deposits beneath the receding ice shelf present opportunities for some companies, but the Nordic countries may risk being drawn into conflicts over these resources. Thus, changes in the physical environment may have far- reaching and unpredictable economic and political consequences, which in turn may entail risks and opportunities for businesses in all sectors.
Perhaps ‘uncertainty’ is a more accurate term than ‘risk’ in this context, since natural phenomena rarely come with known probabilities and possible outcomes attached. This may be of little practical help to risk managers, except perhaps to suggest the risk of complacency in assuming that climate change will have a minimal impact in the North. In any event, companies that are engaged in these issues are likely to be better prepared to deal with concrete risks when they do emerge, as well as to help prevent them emerging in the first place.
‘Due to the vulnerability of the Arctic environment it is likely that only companies that can demonstrate a good environmental management and safety performance will be allowed to operate on these trade routes.’
A.P. Moller – Maersk
9. According to data compiled by the University of Bremen’s Institute for Environmental Physics, the extent of Arctic sea ice reached a record minimum on 8 September 2011, and researchers say the decline can no longer be attributed to natural yearly variations, for example in weather conditions (
http://www.iup.uni-bremen.de/seaice/amsr/ minimum2011-en.pdf). Different satellite observations reported by the National Snow and Ice Data Center at the University of Colorado, Boulder, suggest that the minimum extent of ice in 2011 is the second lowest on record, and data for the past several years lie well below two standard deviations under the 1979–2000 average (
http://nsidc.org/ arcticseaicenews/).
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