While business tends to be seen as a substantial factor in causing climate change, climate‐induced physical changes can also pose major challenges to firms in return. Firms can reduce their vulnerability to these changes by defining and implementing an adaptation strategy. Based on an empirical analysis of the oil and gas industry, this paper examines how the way firms interpret climate events in terms of awareness and vulnerability informs their measures to adapt to climate‐induced physical change. In the empirical analysis, the paper derives four types of adaptation behaviour – pre‐emptive, reactive, continuous, and deferred adaptation – that correspond with different degrees of awareness and vulnerability. The paper concludes with implications for management practice and policymakers. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment.