Climate Change Puts New Pressures on Resilience Managers

I am writing this blog while rain pours down outside of my office, much as it has done for much of the past 3 months in the United Kingdom. Many parts of the country are flooded and there was even an unprecedented tornado in a nearby town yesterday. Television reports show massive flooding across wide areas of Spain, Portugal and the South of France with storm after storm hitting already sodden ground. Although worse in the coastal regions, currently virtually all of Spain is on a RED weather alert. Last month in Venice we saw some of the worst floods for over 60 years, putting that historic and unique city at serious risk of catastrophic damage. This increased level of flooding has been the case across much of the northern hemisphere this winter and for much of the year in parts of North America.

So, unsurprisingly, flooding and extreme weather events were on my mind. Yet, on the other side of the world, in Australia, the worst ever bush-fires have spread terror and destruction across a wide part of New South Wales with Victoria and Tasmania also affected. The current size of the NSW fire is estimated to cover an area larger than the entire country of Belgium and it is spreading with no hope of control until rain comes. With temperatures in excess of 40C we might not have seen anywhere near the worst.   Luckily, to date, the fatalities have been relatively low compared with some earlier bush-fires and this might suggest that lessons have been learned – but with many unable to evacuate the area this might change significantly. 

The latest figures we have from “The Insurance Council of Australia” up to mid December show:

• 700 houses have been destroyed by the fires.
• 2,300 insurance claims have been made 
• A$240m has been claimed on insurance.
• A$12-50m per day is the estimated cost of business disruptions due to smoke in Sydney.
• A third of the Australian population that has been health impacted, so medical bills will run into the hundreds of millions of dollars

From an insurance perspective we are still in the early phase of the claims cycle so these figures are likely to be much higher. If these levels are repeated regularly in future the cost of insurance will have to rise so much that many individuals and small businesses might find it impossible to cover themselves adequately. However population still continues to grow rapidly in areas designated as fire-prone. It is estimated that more than 1.6m people and an ever increasing range of small business now are in communities that have a “high to extreme risk of bush-fire”.

In such circumstances the visual impact is so shocking that we often overlook the dramatic consequences that the disaster can have on business and trade. If we consider Sydney alone then the smoke pollution creates considerable absenteeism with people missing work because they feel unwell, cannot get disrupted transport, have dependents to care for, or are worried about being away from home. There are many examples of the haze tripping fire alarms, causing unnecessary and disruptive evacuations. Retail shops, hotels and restaurants immediately suffer as people avoid the city. The long-term health hazards will also mean that illness, absenteeism and reduced productivity might last for a much longer period than might be assumed.

On a somewhat related subject, the recent Climate Change Conference (COP25) concluded in Madrid with effectively no agreement on anything other than to meet again in 2020 in Glasgow. I have long argued that businesses and communities need to be as resilient as possible to be able to adapt quickly to an ever evolving climate. At this stage it is largely irrelevant what we believe the reasons are for the increased incidents of extreme weather. The empirical evidence indicates that the planet is getting hotter and that carbon dioxide is increasing in the atmosphere. The world cannot change either of these factors in a time-scale that is meaningful for strategic business resilience planning. Therefore we obviously cannot wait for carbon levels to be stabilized or reversed.

In the annual DRI International Analysis of Resilience Trends, extreme weather incidents as a result of climate change are only seen as a moderate risk concern by professionals. This emphasis really needs to change given what we can clearly observe is happening globally. Resilience professionals might conclude that there is nothing they can do about reducing carbon levels (other than in a personal capacity) so the consequences will have to be handled by existing Crisis Response and Disaster Recovery capabilities. However, when it comes to dealing with a changing climate, we cannot rely on existing assumptions. We cannot eliminate the risk so we must work out how to mitigate it. The decisions we take today about the location of operational activities, investigating and implementing new resilient technologies and adapting our business models to suit different climatic conditions are vital. They will probably make the main difference between firms that survive and prosper and those that fail. “Adapt or Die” is an old adage for business – never truer than in 2020!