Building business resilience in an age of extreme weather
For years, extreme weather was treated as rare, local, and insurable. Now it’s frequent, global, and increasingly unmanageable—at least with traditional approaches.
Changing global weather patterns mean that past assumptions about a site’s exposure to extreme weather may no longer be valid, explains Dr. Louis Gritzo, chief science officer at FM.
“Even if a site isn’t near a river or coastal location, it could still be exposed to flooding,” he says.
“As the world warms, more water is held in the atmosphere and when rainfall hits, a huge amount of water can fall all at once, resulting in the kind of flash flooding we have seen in the U.S., Mexico and Europe.”
Some companies—typically those that have yet to suffer an extreme weather event—may not have noticed that the world has changed. “Those that haven’t are usually caught up in the day-to-day job of managing their business—and risk management is something where doing the very minimum may seem acceptable.”
But those companies are increasingly rare. In a recent FM survey of 800 risk managers in the industrial manufacturing and technology sectors: More than 60% say their company has suffered at least one severe weather disruption in the past three years.
Businesses are also beginning to realize that insurance alone isn’t enough to address this growing risk. Our survey respondents believe that, on average, their insurance would cover less than half the cost of an extreme weather event.
Small steps, big impact
These challenges call for a strategic, science-backed approach to mitigate extreme weather risks, starting with the following measures::
- Prepare for an event to happen at some point.
“It’s difficult to find a place that has no exposure to natural hazards,” says Dr Gritzo. Businesses should therefore assess and mitigate the risk for every site, not just those that have been affected in the past. - Start with practical steps.
Simple but impactful measures include developing an emergency response plan, conducting regular roof drain maintenance or even installing temporary flood barriers. When informed by robust risk engineering and backed by climate data, these can make a substantial difference when extreme weather hits. - Find the right partner.
Mapping your risk exposure requires an understanding of both the science behind changing weather patterns and the impact it has on business operations. This goal needs proven, sound technical capabilities, which businesses can access by partnering with risk experts.
“We always conduct a site-by-site risk assessment and then we build that picture into a business-wide view of the overall company exposure,” says Gritzo.
“That’s where you start to see the overall risk profile, can understand what to focus on first and explore the most effective measures to mitigate those risks. That doesn’t always require a huge amount of resource to have significant impact.”
Prioritization is key
No organization can implement every mitigation measure at once—not without generally excessive investment and operational disruption. It’s crucial to building a plan that is balanced with the resources available, both now and in the future; and have a plan with clear steps for implementation, even if it will take years to complete.
While some measures such as permanent flood protection require little upkeep, lasting risk reduction depends on something more enduring—people. “The holistic approach to risk reduction will always involve people. There will always be that human element to it,” says Gritzo.
Extreme weather risk isn’t static—it’s dynamic, accelerating and interconnected. Managing it effectively demands a long-term, adaptable approach and one that is grounded in climate science, guided by engineering and delivered by people at every level of the organization.