Unpredictable weather is a risk that can’t be put off or ignored. In fact, insurer payouts for weather-related catastrophes rose from $15 billion a year between 1980 and 1989 to a staggering $70 billion annually between 2010 and 2013, a study found.
While major weather events are a focus of businesses, small events can still have a big impact, according to The Weather Business: How Companies Can Protect Against Increasing Weather Volatility by Allianz Global Corporate & Specialty.
Even though weather volatility is shown to be rising globally, organizations are still failing to protect their revenue from the risks of changes in temperature, snowfall, wind levels, rainfall and too much sun, the report found. Changes in weather can also impact a number of industries including construction, energy, retail, tourism, food, distribution and transport.
Bad weather, however, is no longer an excuse for company stakeholders. Analysts, lending and rating agencies are increasingly looking at whether weather risks are included in a company’s risk management program, the study found.
Weather risk management can help companies hedge the risk posed by fluctuations in weather, similar to how companies already combat the threats of interest rate and foreign currency exchange movements, the report said.
