Business leaders should start drawing up contingency plans to manage climate change-related risks as efforts to stem carbon emissions stall, Zurich says in a report.

The global insurer says it is looking increasingly likely the Paris Climate Agreement to limit global warming to well below 2 degrees will fail.

“So businesses should prepare for the physical consequences of a warming planet,” Group Chief Risk Officer Alison Martin says in the report.

“Companies must know the magnitude of their climate risk, so that they can prioritise actions based on their particular circumstances.

“It’s crucial for businesses to develop a climate resilience adaptation strategy and act on it now.”

Zurich outlined a three-step approach for developing a resilience strategy in the report, which was published ahead of a climate change forum in New York.

The strategy involves identifying business and strategic risks, developing a granular view of risks and formulating a mitigation strategy using insurance as one of the tools.

“We firmly believe in prevention as the best form of protection,” Ms Martin said. “Adaptation costs for climate change effects may be significantly lower than damage costs.”