Security & Business Resilience

Impact of Volatile Weather on Businesses’ Profits is Increasing

December 2, 2013
/ Print / Reprints /
ShareMore
/ Text Size+

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.

In a new report ‘The Weather Business – How companies can protect against increasing weather volatility’, which focuses on the growing importance of weather risks for businesses, industrial insurer Allianz Global Corporate & Specialty SE (AGCS) highlights the economic impact of fluctuating weather conditions and how companies can protect themselves, using new approaches to ‘weather risk management’.

According to the report, the economic impact of increasing everyday weather volatility far exceeds the already huge sums annually associated with natural catastrophes. AGCS estimates that the impact of routine weather variation on the European Union’s economy could total as much as €406bn (£346 billion /$561bn) a year. As a comparison, during 2012, there were 905 natural catastrophes worldwide, 93% of which were weather-related disasters, costing US$170 billion[2]. And what’s more, the direct cost of weather volatility around the world is increasing significantly. According to Allianz, insurers have paid out US$70 billion globally for damages from extreme weather events every year for the last three years alone. Back in the 1980s, “only” US$15 billion a year was paid out for such claims.

In many countries, retail is one sector which is heavily exposed to poor weather, especially in the all-important pre-Christmas period when retail footfall traditionally increases significantly. Other sectors which can be badly affected include the agri-food industry, construction, distribution, energy, tourism and transportation, the report says.

Despite these losses, many businesses are still failing to identify the link between climatic conditions and their own revenue streams. Yet, the weather does not even have to be extreme in order to have a negative impact on a company’s cash flow. Sometimes it is enough for it to be uncommon, unseasonal or merely unexpected to generate a decline in revenue, it notes.

In the past, many businesses did not know how to protect their profits from unfavorable weather conditions. However, there is now an increasing awareness and interest in weather risk management tools, which enable companies to hedge this risk, similar to the way they might do with interest rate movements and foreign currency exchange rates.

Read more here: http://www.agcs.allianz.com/about-us/news/art-weather-report/

Did you enjoy this article? Click here to subscribe to Security Magazine. 

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

ASIS 2013 Product Preview

ASIS International 59th Annual Seminar and Exhibits, September 24-27 in Chicago, Illinois, will include an exhibit hall packed with innovative security solutions. Here are some of the products that will be shown at ASIS this year.

Podcasts

Virtualization and Data Center Security: What You Need to Know for 2014

Data centers are increasingly becoming the center of the enterprise, and data center and cyber security is following the same path for security departments. According to Justin Flynn, a consultant at the Burwood Group, the virtualization of data centers allows enterprises to scale more easily and faster, with a smaller footprint.

However, hosting enterprise data in the cloud can make intrusion detection more difficult – how can enterprise security leaders team up with other departments to keep aware of cyber risks and traffic, and physical and data compliance during the virtual transition? How can CISOs and CSOs discuss cyber threats with the C-Suite to get the resources they need? And how can the proper infrastructure test and verify possible malicious attacks? 

More Podcasts

Security Magazine

September 2014

2014 September

In the September issue of Security Magazine, find out who this year's most influential people are in the security industry are. Also, take a peek at the technology products that ASIS 2014 will be showcasing at the upcoming event. Read about the lessons learned from security at the World Cup, find out why tactical medical training is a must for your enterprise and how Atlanta increased security by sharing surveillance.
Table Of Contents Subscribe

Adopting New Technology

How long do you wait before adopting a new technology?
View Results Poll Archive

THE SECURITY STORE

comptiahighriseproductphoto
CompTIA Security+ Certification Study Guide
CompTIA's Security+ certification is a globally-recognized, vendor neutral exam that has helped over 60,000 IT professionals reach further and higher in their careers. The current Security+ exam (SY0-201) focuses more on being able to deal with security issues rather than just identifying them.
More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Vertical Sector Focus: Critical Infrastructures

criticalhomepagethumbFrom terrorism to vandalism, it’s preparedness, response, training and partnerships. Learn about some of the critical security issues facing this sector.

Visit the Critical Infrastructure page to read more.  

STAY CONNECTED

Facebook 40px 2-12-13 Twitter logo 40px 2-12-13  YouTube  LinkedIn logo 40px 2-12-13Google+