Climate Change

As concerns over climate change and increasing risk from natural hazards continue to top corporate board agendas, the question is continually asked as to the link between a changing climate and the frequency and severity of natural hazard events.

There are several areas where conclusive evidence exists regarding climate change, its potential economic impact on property and businesses interruption, and what can be done to mitigate potential risk. Primary examples include increased flood caused by precipitation changes and sea-level rise, and wildfire as a result of extended droughts.

Although no individual extreme weather event can be solely attributed to climate change, trends in weather patterns continue to be unpredictable. The potential for increased tropical cyclone and tornado risk remains inconclusive, and studies are ongoing to improve climate models and understanding of climate impact.

Shifting demographics

Regardless of changes in the climate, economic losses from natural hazards will continue to increase due to three factors:

  • The rise in world population and associated value at risk in areas exposed to natural hazards;
  • The increasing vulnerability due to globalization of business and growth of supply chain risk; and
  • The rapid development of developing markets that are less resilient.

Preparation is key

As a market leader in property loss prevention, FM Global will continue to evaluate climate change and its evolving risk. At the same time, we're expanding our efforts to develop practical, cost-effective engineering solutions to improve our clients' resilience to natural hazard loss and resulting business interruption.

Given the susceptibility of business disruption and property damage as a result of extreme weather, FM Global recommends that you:

  1. First address your known property risks. Protect yourself against the natural hazards that could threaten your business.
  2. Next, monitor the geographical areas where climate change has been shown conclusively to be increasing natural hazard risk.

For the convenience of the public, FM Global provides tools to assess and mitigate the impact of natural hazard events. Visit fmglobal.com/nathaz to learn more.