UK ranks among Europe’s biggest climate risk underestimators – FM

UK businesses are underestimating their exposure to climate risk despite operating in a country with resilient infrastructure, according to commercial property insurer FM.

Its 2026 index, called the FM Resilience Index, ranks 130 countries and territories against 18 macro and physical risk drivers. It found that the UK has Europe’s most significant “climate risk awareness gap”.

FM surveyed 800 risk decision-makers and asked them to estimate the proportion of economic activity in their country exposed to wind and flood risk.

Across all respondents, 74% underestimated their actual exposure – with the awareness gap widest in China and India, followed by Australia, Canada and the UK.

The report warned that this disconnect between perceived and actual exposure could have material consequences for UK firms’ property resilience and supply chain stability.

Leo Kushner, business intelligence director at FM, said: “What businesses don’t see can hurt them, especially as climate and operational risks shift faster than expected.

“The 2026 FM Resilience Index delivers the objective insight leaders need to navigate volatility, understand evolving risk and make more resilient strategic decisions.”

30% slower recovery

While the UK faces climate exposure – with major economic centres located in areas prone to wind and flood – its infrastructure is considered well prepared to withstand these perils.

However, FM’s loss data showed that locations with lower resilience levels take more than 30% longer on average to recover from property losses than those ranked in the top 50. This, the insurer said, directly threatens long-term profitability and supply chain continuity.

The UK’s overall business resilience was also weighed down by macroeconomic pressures. Its inflation ranking fell by 20 places year-on-year, limiting organisations’ strategic capacity to invest in climate adaptation and recovery planning.

The annual index draws on third party data, including from the International Monetary Fund and World Bank, alongside FM’s own property loss prevention datasets. It assesses factors including climate risk exposure and quality, fire risk quality, cyber security, political risk and inflation.