Extreme Weather Is Already Draining The Biggest U.S. Companies

Extreme Weather Is Already Draining The Biggest U.S. Companies

Jun 19th, 2014

Extreme Weather Is Already Draining The Biggest U.S. Companies

The recent Carbon Disclosure Project (CDP) report shows how Pepsi, Allstate, Walmart, and dozens of other S&P 500 corporations face large financial impacts as climate change worsens. It seems that political diatribes over whether climate change is real should be over now?

Extreme Weather Is Already Draining The Biggest U.S. Companies

Extreme Weather Is Already Draining The Biggest U.S. Companies

At Riskope we have been including climate change scenarios and their related costs for a few years in all our holistic risk assessments: from automotive producers and suppliers to mining, insurers and critical infrastructure.

Declared impacts by various industries reportedly cover a wide spectrum of issues, such as, for example:

  • weather-related sourcing challenges.
  • changes in consumer preference due to elevated temperatures, 
  • changes in crop yields due to changes in precipitation and temperature patterns, 
  • increases in production and transportation costs and 
  • increased supply-chain costs due to changes in crop locations, 
  • increased energy cost, disruptions due to flooding, and volatility of hedging costs.

Weather-related insurance claims are of course also on the rise, with sometimes staggering “single event” claims reaching and exceeding the billion dollars bar.
Large, complex industrial systems seeking long term sustainability have to perform 360-degrees holistic risk assessments  in order to follow a rational and efficient decision-making path. They also have to seek enhancement in contractual clauses of Force Majeure. In many cases we have shown our clients that B2B solutions based on fair and well designed Force Majeure clauses are significantly better than “boiler plate” contracts, large insurances and the prospective of litigation in the aftermath of a severe, extreme event. It is likely that proper risk assessments will also provide protection against negligence  challenges.

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Category: Consequences, Crisis management, Hazard, Mitigations, Probabilities, Risk analysis, Risk management

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