Navigating the Storm: Helping your Organisation Prepare for the Changing Climate

This is the first article in our upcoming series on Climate Resilience and the impacts, planning, preparation, and adaptation for your organisation to a rapidly changing climate. Our next article will address the impacts of climate change on vector-borne diseases and occupational health and safety.

Climate change is no longer a topic that can be ignored in the executive boardroom or delegated to risk management teams. The summer of 2023 saw an increased number of climate and extreme weather-related alerts published by our Medical and Security Information & Analysis teams worldwide. Natural disasters, with their impacts and breadth exacerbated by climate effects, are one of the alert topics that generate the highest ‘open rate’ across our client base. Until recently, an issue only seen as relevant for government agencies or organisations in disaster-prone areas, extreme weather now causes widespread disruption to businesses, communities, and workforces in areas unaccustomed to destructive climate events. In August alone, Southern California saw its first tropical storm in a generation, devastating wildfires destroyed tourism-dependent communities in Greece and Hawaii, while heatwaves across Western Europe impacted the health and safety of millions. An organisation that does not plan for the effects of climate change does so at its own peril. 

The Challenges of Planning for a Changing Climate

How can a business which makes decisions based on financial data, operational inputs and other quantitative metrics incorporate planning for uncertain, infrequent, unpredictable, but high-impact events like climate-related disasters? How can an executive team develop credible plans for long-tail events, which by their nature are often unforeseeable, and dedicate sufficient resources and attention to resiliency plans? With International SOS as your partner, we can provide the climate resilience and risk management plans that can support your organisation against increasingly hostile weather events that can put your business continuity, supply chains, reputation, and employees at risk. 

Our climate resilience services leverage our nearly 40 years of assisting clients with risk management plans for medical and security emergencies. Using our framework of ‘Anticipate, Assess, Assist and Adapt’, our climate resiliency solutions follow a similar methodology: 

• HEALTH AND SAFETY: Direct, and potentially life-threatening health and safety impacts to employees, clients, and customers.
• PRODUCTIVITY: Adverse mental health impacts, low employee morale, remote work delivery of services, time off for healthcare treatment.
• RISK MANAGEMENT: Climate resilience plans incorporated into workforce resilience plans, modelling financial impacts of climate events.
• PHYSICAL INFRASTRUCTURE AND ASSETS: Temporary lack of access, incapacitation, or destruction of buildings, production plants, distribution sites, etc.
• SUPPLY CHAIN: Disruption to suppliers and critical inputs necessary for production and/or delivery of goods and services
• REPUTATIONAL RISK: Negative coverage and loss of customers due to perceptions of exacerbating climate crisis (e.g., heavy emitters), profiteering (e.g., airlines), or inadequately protecting staff.
• PRODUCT AND SERVICE MIX: Growing irrelevance of products and services offered to customers (e.g., diving tours in dying coral reefs) or inability to maintain quality (e.g., winery in wildfire area).

International SOS is expertly placed to help your organisation with the first three pillars, Health and Safety, the ultimate priority during a climate emergency, as well as with Productivity and Risk Management. One of our partners, Resilience First, the world’s largest business network for resilience leadership in the private sector, is well equipped to help with many of the other pillars, and provide resources with their industry-leading research, whitepapers, and thought-leadership. 

Assessing Impact and Known Probabilities

In the extractives industry, probability modelling is frequently built into financial models and business planning to adequately account for the uncertainty of resource viability. To begin assessing the potential impacts and costs of extreme weather, climate resilience planning also requires the use of probability models. While there is no guaranteed method of calculating climate disaster probabilities, organisations can begin with ‘known vulnerabilities’ and/or high impact areas, such as facilities in low lying, flood-prone areas, seasonal storm paths or areas that have been recently subject to extreme weather over the past three years. More precise models can be developed depending on clients’ specific needs and vulnerabilities, such as standard deviations from temperature means for companies with high percentage of outdoor workers, or historical data around wildfires, wind patterns and precipitation levels for operations located near forested areas. Probability models can then assist an organisation quantify the costs of potential business and operational disruption, which then provides invaluable insights for prioritising risks, resourcing initiatives, and getting sustained C-suite attention. 

Spatial and Non-Linear Climate Risk 

Extreme weather hazards affect targeted local areas, therefore, the impacts and risk assessments for climate events need to be analysed within a clearly defined geographic area. A climate resilience analysis which examines the risk for an entire state, county or city is much less useful than one that assesses the unique threats to a specific location. International SOS’s 40 years performing detailed security and medical risks assessments for precise client sites gives us the necessary experience for actionable climate risk analysis. The impacts to your organisation from climate disasters are also likely to unfold in a non-linear way, given that built and ecological environments can break down completely when placed under continued and ongoing stressors. For example, the impact of floodwater costs on a UK train station, shown below from a McKinsey Global Institute study¹, demonstrates how impact becomes nonlinear after breaching a certain threshold²:

The impacts to your business operations and employees will likely also be non-linear – an important consideration in building your climate resilience strategies. For example, during a heatwave at a client construction site, up to a certain temperature, workers will work more slowly, and productivity rates will fall, however, progress may continue. Once a certain temperature threshold is breached, however, and it becomes hazardous for workers to be outside, all work will halt, increasing the costs in a non-linear, albeit stable rate after this point. 

Adding to the non-linear impacts, climate disasters can often overlap, accelerating the threats and impacts to your business. In the previous example, as seen recently in the Western U.S. and Western Europe, the extreme heat can cause uncontrolled wildfires, damaging vital infrastructure, worker accommodation and the construction project itself, increasing costs and disruptions exponentially. 

Integrating your ESG Strategy and Resilience Plans 

No strategy should be an island, and the success of your organisation during a climate emergency requires the strategic integration of your ESG strategy and workforce resilience plans. The focus of the operational health and safety initiatives of your ESG strategy’s ‘S’ Social pillar, for example, need to be closely aligned with your climate resilience plans. In this example, ensuring high safety standards and certifications on your production floor through strategic ESG initiatives will facilitate a safe and orderly evacuation of workers during a climate disaster. As another example, developing CSR partnerships with local health authorities and supporting access to medical services can help prevent a health system capacity overload during a climate emergency, which can help a community recover quicker and return your employees back to work faster. 

International SOS’s 40 years of experience, supported by our world-leading experts, and anchored by our best-in-class crisis planning and risk management methodologies will help your organisation understand, prepare, and adapt to the new realities of extreme weather and climate-induced disasters.