Climate risk has graduated from a compliance footnote to a frontline concern in dealmaking. Buyers increasingly want to know whether a target's flood, wildfire and storm exposures are adequately insured, whether resilience measures are in place, and whether they are about to acquire an asset that is becoming uninsurable.
That’s according to Luise O'Gorman (pictured), global head of ESG (Environmental, Social and Governance) transaction advisory services within Aon's M&A and Transaction Solutions team.
O’Gorman told Insurance Business that climate risk is "now being assessed with the same rigor as any other risk and value driver within a transaction context,” often as a dedicated workstream rather than a line item buried inside a broader ESG review.
The shift comes as the US experienced 27 separate billion-dollar weather and climate disasters in 2024, the second-highest annual count on record, at a total cost of $182.7 billion, according to NOAA's National Centers for Environmental Information. The 1980-2024 annual average was 9.0 such events, but the 2020-2024 average jumped to 23.0.
For brokers, however, the change also signals a valuable new advisory opportunity. Insurance's growing influence is most evident in the link between a target's climate profile and its insurability.
"There's a greater appreciation that climate risk is a financial risk," O'Gorman said. "Insurers, lenders and regulators are paying closer attention, and buyers increasingly want evidence that climate exposures have been addressed and that the businesses they acquire are resilient."
In practice, that means assessing which physical perils a target faces, then examining whether resilience measures and insurance limits are adequate.
O’Gorman explained: “This is about understanding whether the target and its assets are exposed to risks such as floods, storms, wildfire and trying to understand the potential financial impacts these may cause, whether in terms of asset damage or business interruption.”
She added that due diligence increasingly extends beyond acute threats such as floods and wildfires to chronic risks including heat, drought and precipitation stress, with buyers seeking to quantify their financial impact.
"When clients can demonstrate they understand the risks and have modeled them appropriately, conversations with insurers become easier,” O’Gorman said.
There is also a structural gap brokers can step into. Unwritten's 2025 benchmarking of private-market climate disclosures found that nearly 67% of firms now include climate risk in pre-investment due diligence, but only 13% apply the same discipline across the full investment lifecycle from acquisition to exit.
That "implementation gap" is an open invitation for brokers to offer ongoing exposure monitoring and resilience advice through the hold period, not just at the point of sale.
O'Gorman urged investors to think well beyond their own horizon. While private equity sponsors may look five to seven years out and infrastructure investors 10 to 20, she argued the analysis should also account for the next buyer's horizon.
"By the time you add two hold periods together, you may already be looking toward 2040 or 2050,” she said. That longer time horizon also turns climate advice into an ongoing engagement rather than a one-off placement opportunity for brokers.
The growing need for continuous monitoring also raises another challenge: access to reliable climate data. NOAA's billion-dollar disaster database was discontinued in 2025, leaving Climate Central and other private and non-profit organizations to fill some of the gap. Climate Central estimated 2025 losses at $115 billion, the third-highest total on record.
With authoritative federal data harder to access, clients will lean more heavily on advisers armed with catastrophe modelling expertise.
“We can leverage natural catastrophe models and climate models to provide clients with an understanding of current exposure and forward-looking exposure under different climate scenarios,” O’Gorman said. “Combining both provides a holistic view of climate risk.
“Looking forward… I expect more focus, higher expectations around quantification and greater emphasis on turning assessments into actionable recommendations, whether from a resilience or insurance perspective.”
As climate risks become increasingly material to valuations and insurability, brokers have an opportunity to evolve from transaction support providers into long-term advisers on resilience and risk management.
