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The rise of extreme weather is severely impacting business, yet many companies remain complacent, running risks that grow greater with each passing year. However, for forward-thinking companies, there are straightforward measures they can take to enhance their resilience in the face of today’s intensifying natural threats.
[Related on MHA Consulting: Weird Weather: How to Be Resilient In a Time of Climate Chaos]
Turbulent Skies and Worsening Impacts
There is no doubt that the number and intensity of adverse weather events is increasing. In 2023, the U.S. experienced more billion-dollar weather disasters (28) than in any previous year. Through August of this year, there were already 20 such events.
Tornadoes, thunderstorms, hail storms, hurricanes, wildfires, heat waves, and cold waves are growing more frequent and severe. And the impacts on the ground are increasingly devastating.
Extreme Weather’s Impact on Business
Business is not immune to the impacts of extreme weather. Floods, wildfires, and other natural disasters routinely damage company assets, force the evacuation of facilities, interrupt operations, and scramble supply networks.
Unfortunately, many executives have been slow to accept the reality that the risk of extreme weather to their businesses is increasing. If this describes you, I’d like to encourage you to reconsider your stance. Your company and its stakeholders are too valuable for their safety to be left to chance.
For those who already recognize this risk of extreme weather, there are practical steps you can take to strengthen your company’s resilience. By implementing these measures, you’ll be better positioned to weather the storms that lie ahead. The measures can be summed up in three words: assess, mitigate, and adapt.
Assessing the Risks
The first step in reducing your organization’s vulnerability to extreme weather is assessing the risks to your areas of operation. A great starting point is your local and regional emergency management office, which can typically provide valuable data on the natural disasters most likely to affect your area. Using this information, develop a list of the five or 10 weather events that are most likely to impact your company, considering both their frequency and potential severity.
When conducting this assessment, cast the net widely. Take a broad view geographically because in today’s world disasters have a tendency to cascade and expand, impacting areas far beyond the immediate vicinity. Also, remember to assess potential impacts not just on your organization but on the suppliers and customers critical to your operations.
Strengthening Your Defenses
The second measure to take to fortify your company against weather disasters is to implement mitigation controls to address the most likely and impactful threats. You may not be able to achieve 100 percent protection, but for most threats a figure of 70 or 80 percent protection might be obtainable.
One type of weather-related threat that looms large for most organizations is a power outage. A mitigation to protect against loss of power would be installing generators and ensuring they have adequate power capacity and fuel.
Other effective mitigations for threats arising from extreme weather might include improving windows, moving critical ground-floor equipment to a higher floor, and upgrading the roofing.
By thoughtfully fortifying their facilities and operations against the most likely and impactful threats, companies can significantly reduce their vulnerability to weather-related disasters.
Adapting to the New Reality
The final step you can take to lessen your vulnerability is to adapt your organization generally to the new reality of extreme weather. One example of such an adjustment would be making sure you have the appropriate level of insurance. If you implement new mitigation control to protect a facility, you might be able to reduce the amount of insurance you carry on that building.
Another recommended adaptation is to integrate your threat assessment effort with the enterprise risk management department, an arrangement that can provide a holistic view of risk, improve resource allocation, streamline communication, and enhance resilience planning.
The Benefits of Being Proactive
The increasing frequency and intensity of extreme weather events demands a proactive approach from businesses to ensure resilience. By assessing risks, implementing effective mitigation strategies, and adapting to the evolving landscape, companies can better prepare for and respond to the challenges posed by severe weather.
Integrating these efforts with enterprise risk management can further strengthen the organization’s defenses and streamline their response efforts. Embracing these measures will position businesses to navigate the stormy weather ahead with confidence and stability.
