With two wildfires burning north of Los Angeles and drought in the Midwest U.S., it’s difficult to think of heavy rains and resulting flooding disrupting supply chains, but this is precisely the time to plan for such events. Indeed, a changing climate will almost certainly lead to extreme rainfall, and U.S. businesses, depending on their location, should start preparing now to minimize supply chain risk, according to a new white paper.
“Businesses must recognize that climate change is happening and it will generally get warmer,” writes Dr. Kevin Trenberth, distinguished senior scientist at the National Center for Atmospheric Research, in the white paper, “Coping with Extremes: The Impact of Climate Change on Extreme Precipitation and Flooding in the United States and How Businesses Can Prepare Now,” from FM Global, one of the world’s largest commercial property insurers. Dr. Trenberth is one of four leading atmospheric scientists consulted for the paper.
In general, wet areas of the U.S. will likely become wetter and dry areas will become drier. Of particular concern, the paper notes, are changes that are severe in the extreme: “Extreme events have the greatest potential to produce natural catastrophes that affect businesses, jobs and economies on a regional or global scale,” according to the paper.
This isn’t the first time Dr. Trenberth has written about the changing climate and a likelihood of extreme weather. In the National Climate Assessment in 2014, he and other scientists explained that they have seen significant increases since the mid-20th century in the amount of precipitation falling in very heavy rainstorms: up 71 percent in the Northeast, 37 percent in the Midwest and 27 percent in the Southeast. It is the result of global warming, which has, on average, put more than a trillion gallons of extra water into the atmosphere over the contiguous 48 states, probably closer to two trillion gallons, Dr. Trenberth and David R. Easterling wrote.
Consequently, “It rains harder than it used to,” said Dr. Trenberth, who added, “When it rains, it pours.”
The new paper does note that geographic variability will be a key factor. For instance, certain regions of the U.S. are expected to be prone to more intense precipitation events and a potentially increased risk of flooding. On the other hand, the paper explains, other regions are prone to less precipitation, prolonged droughts and a potentially increased risk of wildfires. The paper recommends then, that businesses and property owners prepare for locally intense precipitation or drought considerations, depending on their location.
For those companies in states prone to heavy rain and flooding, the authors recommend that executives focus on both water management, such as diverting water from property and considering new weather extremes when managing supply chains, and psychological obstacles to preparation. So, for example, executives should beware of what the authors call “generational memory threshold,” which occurs when a community’s collective memory is too short to remember major disasters such as an earlier 1-in-500-year hurricane.
Another obstacle is heedlessness. In earlier FM Global research, 96 percent of financial executives surveyed said their companies had operations that were exposed to natural catastrophes such as hurricanes, flood and earthquakes, yet fewer than 20 percent said their organizations were “very concerned” about such disasters hurting the bottom line.
In recent years, Tennessee had heavy flooding that closed Interstate 24, two feet of rain fell on the Florida Panhandle and Alabama coast and caused the states to close highways, and seven inches of rain fell on Chicago overnight and flooded all highways and interstates around the city—and swamped homes as well as businesses, warehouses and distribution centers. Last year, after significant rain fell all week in Texas, Houston received 11 inches of rain in less than three hours, flooding much of the city and closing the freeway. These types of storms, and subsequent flooding, seem to be all too common now.
Is your supply chain prepared for disruptions caused by heavy rain and flooding?