In today’s bulletin, Charlie discusses the impacts of extreme weather on our organisations and gives an insight into the importance of planning for climate change.

I have returned from two weeks in Aruba, where I was working with my power and water utility client. We carried out a series of training exercises and updated their resilience and emergency plans – work I have been supporting for the past eight years. During my visit last year, they asked me to write a paper examining the potential impacts of climate change on the island over the next 50 years. Two main impacts were identified: average temperatures are projected to rise by 1–2°C, while sea levels could increase by 25-30 cm. For a flat island that depends heavily on tourism, with much of its critical infrastructure located close to the sea, the impact on its livelihoods and facilities would be significant. In addition to the impact of changing sea levels, there would be an impact on the company I was working for. Rising temperatures will increase demand for electricity as air conditioning becomes more heavily used. At the same time, higher rates of evaporation are expected to increase the saltiness of the seawater, which would affect their desalination plants. Watching the UK experience the heatwave this week and record the highest June temperatures ever prompted me to write about the impact of rising temperatures on our organisation’s business resilience and business models.

Do you have an agreed climate model?

Does your organisation have an agreed model of what the effects of climate change could be in your areas of operation? Most organisations accept that climate change is real and will influence future conditions, but far fewer have developed realistic models that assess what those changes could mean for their own operations. The impacts will vary depending on sector, geography, and the services an organisation provides.

I think each organisation should do an impact assessment on the possible scenarios and then should factor this into their business planning. For future business planning, organisations shouldn’t just take the business climate but also consider the possible climate scenarios. This is not just the possible risks with more extreme weather, but how climate change will impact your business model and demand for your products and services.

In Aruba, the population is rising, and new tourist hotels are being built all the time, which will naturally increase power consumption. The organisation should also layer in how climate change will increase the demand for power from the existing and future populations and industries. An increase in temperature will also make power more expensive to generate, as increased engine cooling may be needed or engines may operate less efficiently at higher temperatures.

Without an agreed climate model or a set of future scenarios, business plans are unlikely to reflect the realities of a changing climate.

Possible business impacts

1. Impact on people and workforce

Will climate change and peak weather events lead to your staff performing differently than they would normally? Will they be tired as they have had difficulty sleeping, and will this lead to more sickness? If your staff are performing tasks in a hot environment or outside, do you need to change the working hours to avoid the hottest time of the day, or will there be more accidents as people concentrate less? As part of your climate change model, you need to research if there is a gradual increase in temperature – which we will have time to adapt to – or whether there will be more extreme weather events which temporarily change the way we work. If there are more extreme events, then we need to think through how we change our ways of working to cope with this and then, once the event is over, revert back to our normal working model.

2. Impact on building and working environments

Many of our workplaces are designed to keep the heat in rather than keep the heat out and haven’t been designed with cooling in mind. Adapting old workplaces to be air conditioned can be difficult and expensive. This week, I went into the Databarracks office, which was air conditioned, and it was a very pleasant environment to work in, but my home office in Scotland got very hot by the end of yesterday. That is not something you say in Scotland very often! If your building contains activities which generate heat, such as data centres, manufacturing processes or commercial kitchens, or work activities which need cooling, such as food and medicines storage, then you have to think through what the process is for staff to tolerate the heat, and whether you have to make changes to the premises to cope with changes in temperature.

3. Increased consumption of power

To meet the required cooling, there is likely to be increased demand for power. This is mainly an issue for those which generate it, but if power consumption massively goes up – as it does in very cold periods – the grid could become unstable. This could lead to power cuts and companies being unable to meet demand.

4. Customer risk changes

I heard on the news last night that Paris has banned the sale of alcohol on weekend evenings, with the exception of restaurants. This is because, with hospitals at peak capacity dealing with heat-related admissions, they don’t want accidents associated with drinking to put additional demand on their healthcare system. If you work with the elderly or children, on whom extreme weather conditions have the greatest impact, you should have plans in place for how you would handle an extreme weather event. Your model should take into account what the likely increase in demand might be and how it could impact your organisation. If you have to operate differently, then you need to have plans for what you are going to do.

5. Impact on your suppliers and partners

As well as being aware of the impact on your organisation, you need to think through how your suppliers and partners may be impacted and whether extreme events can impact their delivery of service to your organisation.

6. Machinery breakdown

Most equipment has temperature tolerances, and if they go outside this, they have a greater chance of breaking down. Is your machinery operating at the top of its tolerance level? In extreme weather, you are likely to have more breakdowns, or machinery may operate at a lower level than it normally does.

Climate change doesn’t just impact the business continuity manager, as weather-related incidents become more likely, but can fundamentally change an organisation’s business model and their risk profile. Climate change, with its changes to existing weather patterns and the likelihood of more extreme events, is going to have an impact on all our organisations.

If we can make our organisations more resilient by taking into account how climate change can impact our business operations, we will be well placed to deal with what comes our way. But it is only through having an agreed climate change model for our organisation that climate change can be taken into account when business planning, thus ensuring that our organisations have a greater level of resilience.