As the Climate Changes, So Will Precipitation in the United States, Warns Commercial Property Insurer FM Global

Extremes Could Affect ‘Businesses, Jobs and Economies,’ States New White Paper

JOHNSTON, R.I., USA—U.S. businesses, depending on their location, should start preparing now for the increased, extreme rainfall that a changing climate will almost certainly deliver. That's the advice FM Global, one of the world's largest commercial property insurers, offered in its new white paper published today.

"Businesses must recognize that climate change is happening and it will generally get warmer," cautions Dr. Kevin Trenberth, distinguished senior scientist at the National Center for Atmospheric Research, in the white paper, titled Coping with Extremes: The Impact of Climate Change on Extreme Precipitation and Flooding in the United States and How Businesses Can Prepare Now. Trenberth is one of four leading atmospheric scientists consulted for the paper.

In general, wet areas of the country will likely become wetter and dry areas drier. Of particular concern, the paper states, are changes that are severe in the extremes: "Extreme events have the greatest potential to produce natural catastrophes that affect businesses, jobs and economies on a regional or global scale."

The paper introduced several new climate-related concepts, including:

Geographic variability: "Certain regions of the United States are expected to be prone to more intense precipitation events and a potentially increased risk of flooding," the white paper states. "Others are prone to less precipitation, prolonged droughts and a potentially increased risk of wildfires. Since these anticipated changes are not uniformly distributed geographically, it is recommended that businesses and property owners prepare for locally intense precipitation or drought considerations, depending on their location."

Bigger rainfall, but maybe not more overall: Although much of the country has gotten wetter in recent decades, long-term precipitation averages will not necessarily change significantly. Rather, rain may be less frequent but more intense.

The business impact
Extreme wet or dry conditions can affect buildings, machinery, data centers, transportation networks, supply chains, people and sales. When companies have a choice, the experts advise, they should site their facilities in nothing less than 500-year flood zones (where there's only a 1-in-500 chance of a flood every year). Companies should sharpen their focus on water management, i.e., diverting water from property, optimizing drainage and protecting water supplies, and consider new weather extremes when managing supply chains.

The white paper warns businesses of psychological obstacles to preparation. One is "generational memory threshold," where a community's collective memory is too short to remember major disasters such as an earlier 1-in-500-year hurricane.

Another obstacle is heedlessness. In earlier FM Global research, 96 percent of financial executives surveyed said their companies had operations that were exposed to natural catastrophes like hurricanes, flood and earthquakes; yet fewer than 20 percent said their organizations were "very concerned" about such disasters hurting the bottom line.

"As an engineering-driven property insurer, we collaborated with leading experts in atmospheric science to understand in great detail the effect of climate change on precipitation," said Louis A. Gritzo, Ph.D., vice president, manager of research at FM Global. "We very much hope that business leaders will use this white paper to continually enhance their resilience by preparing their property for whatever precipitation extremes they are likely to experience."

The atmospheric experts who collaborated with FM Global researchers for the paper were Trenberth; Kerry Emanuel, professor of atmospheric sciences at the Massachusetts Institute of Technology; Minghua Zhang, dean of the School of Marine Atmospheric Sciences at Stony Brook University; and Dennis Lettenmaier, distinguished professor at the University of California, Los Angeles.

Download Coping with Extremes: The Impact of Climate Change on Extreme Precipitation and Flooding in the United States and How Businesses Can Prepare Now.

About FM Global
Established nearly two centuries ago, FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world's largest organizations, including one of every three Fortune 1000 companies. They work with FM Global to better understand the hazards that can impact their business continuity in order to make cost-effective risk management decisions, combining property loss prevention with insurance protection.

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