Published: Sunday, October 1, 2023
Author: Michael Kraten, PhD, CPA
A few days ago, almost eight inches of rain fell on New York City in a single day. The deluge imposed massive flooding, sewage back-ups, and other economic costs on the nation’s largest city.
The damage, though, didn’t approach the level of loss that occurred during Hurricane Ida two years ago. Eleven New Yorkers literally drowned in their basement apartments during that catastrophe.
The increasing volatility of the weather is now being attributed to climate change. In a news conference regarding this week’s storm, New York City’s Environmental Protections Commissioner explained “The sad reality is our climate is changing faster than our infrastructure can respond.”
This type of meteorological event represents a risk factor that must be addressed by an increasingly wide array of organizations. After all, torrential rains in a flood zone can wipe out all businesses (both large and small) in a region. Businesses in other regions that rely on the ones in the flooded area can also be adversely affected.
In addition, residents of a flood zone can be displaced for extended periods of time. In an era of remote at-home work arrangements, organizations far from a regionally impacted area can be affected by such rainstorms.
Will current attempts to curtail carbon emissions keep global temperatures sufficiently low to curtail the worst meteorological events? Don’t bet on it. Exxon Mobil’s recent Global Outlook report predicts that a 25% decline in emissions by 2050 will not prevent the planet’s temperature from increasing beyond the Paris Agreement’s 1.5 degree and 2.0 degree thresholds.
Are those thresholds important? The first one, if surpassed, may turn New York City’s occasional deluges into frequent events. The second one, if exceeded, may make significant sections of the City permanently uninhabitable.
Such issues have long been the concerns of long term risk management planners. If you’re choosing where to build a large new industrial complex, for instance, such issues have always been significant to you.
But now, if you’re a mainstream firm of any size that conducts business in – or that relies on companies and employees who are located in – regions that can be impacted by torrential rainstorms, then you may need to add meteorology to your list of volatile risk factors.
And given that the vast majority of all regions currently experience some incidents of heavy rainfall each year, most businesses may now need to update their risk scenario analyses.
Originally published at michaelkraten.blogspot.com. All rights reserved by author.