Is Your Supply Chain Ready for More Extreme Rainfall, Flooding?

flooding zsv3207/Adobe Stock

Extreme weather events, including typhoons, heatwaves and wildfires, are becoming increasingly more common due to climate change. Such events could cause major disruptions to business and a company’s supply chain. One type of extreme weather event FM Global, a commercial property insurance provider, is calling attention to in a new report is heavy rainfall, which could lead to flooding and damage a company’s buildings and those of its suppliers.

West Virginia and Texas are just two states that have experienced significant flooding so far this year, with heavier-than-normal rainfall destroying homes and businesses. In its recent report, “Coping with Extremes: The Impact of Climate Change on Extreme Precipitation and Flooding in the United States and How Businesses Can Prepare Now,” FM Global takes a look at how extreme precipitation could impact businesses and their supply chains and how a company should prepare for such an event.

“Heavy rain or severe snowstorms can shut down transportation networks or flood buildings, and thus impact sales volumes,” the report said. “When businesses in the United States are significantly affected by extreme precipitation and flooding, the ramifications can be felt throughout the global supply chain.”

The report, which features FM Global research as well as insight from atmospheric experts, said rainfall in the U.S. is expected to increase throughout the century. Climate change may cause precipitation to become more extreme, as well, with large rainfalls occurring over a shorter period of time, say two days instead of four, making them more severe, the FM Global report pointed out.

According to Professor Minghua Zhang, dean of the School of Marine Atmospheric Sciences at Stony Brook University and one of the experts featured in the FM Global report, a one-degree Celsius increase to the average temperature could create a 2% rise in precipitation. Should average temperatures increase by two or three degrees by the end of the century, rainfall could increase by 8% or higher. It’s a conservative estimate compared with that of Dr. Erich Markus Fischer, from the Swiss Federal Institute of Technology, who estimates a two-degree Celsius increase could result in 60% more extreme rain events, according to research recently published in Nature Climate Change.

Such estimates call to attention the need for businesses to prepare for extreme weather events. Water management is critical for businesses to effectively prepare for an increase in rainfall or change in intensity of precipitation, the FM Global report said.

“Risk managers should take into account these possibilities, making sure they review the resilience of their buildings or new locations to withstand the impact of an extremely high rainfall event and area flooding,” Zhang said in the FM Global report.

Water management and flood risk assessments are not just for businesses located close to a river or major waterway, either. Louis Gritzo, vice president of research at FM Global and one of the authors of the new report, told Spend Matters businesses often associate flood exposure with their proximity to a river. However, heavy rain can also clog drains or flood sewers, causing water to backup into a company’s building wherever it may be located. It’s important for companies to think about the different ways intense rainfall could impact operations, as well as the operations of their suppliers, Gritzo said.

“That is a wakeup call that may not be top of mind for business owners,” Gritzo said.

The goal of FM Global’s recent flood report was to offer customers and businesses some sage and practice advice on how to prepare for more extreme rainfalls in the future, Gritzo said. This process begins with understanding how business operations would be impacted by flooding and how suppliers would be affected as well. It’s a “top-down approach,” he said, that involves identifying where a business’ facilities are located, where supplier facilities are located and knowing how to keep water away from those buildings during heavy rainfall.

To help businesses with flood risk assessments, FM Global plans to release global flood maps later this year. Using updated precipitation data, Gritzo said those maps would continue to be updated to ensure companies are able to determine their level of flood exposure around the world.

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