Weather and business risk
26 June 2012
Accurate weather and climate forecasts can help predict and anticipate risk so businesses are better prepared for the future.
By 2040-60, the UK insurance industry alone is predicted to foot an annual bill for weather damage of £2.25 billion compared to £1.5 billion today. Just about every other type of business you can think of shares similar concerns about today's weather and tomorrow's climate. Every day, the implications of taking the weather into account are huge. Its whims can influence the manufacture of products and services, marketing, demand and, ultimately, profitability. Add to that the changing state of the economy and you've already got a perfect storm, with climate change making the challenge even greater.
As the UK's national weather service, the Met Office, is recognised around the world for the accuracy of its weather forecasts. It's also building a reputation as the place to go for information on climate change, which is rapidly altering the world's weather. Many businesses turn to the Met Office for advice on avoiding the dangers while making the most of the changes to come, whether that's a few days or several decades ahead.
The Met Office understands the underlying network of risks faced by businesses. To help, it supplies everything from underpinning science to sophisticated bespoke products and services. With the weather influencing the way people use energy and its supply, distribution and even trade on the commodity markets, the energy industry is a top Met Office customer.
Energy supply and demand help providers anticipate need and balance energy supply and demand. The weather is also one of the biggest hazards people face when they fly. The aviation industry is another big customer of the Met Office, which supplies airports and airlines with forecasts that ensure punctuality, efficiency and, above all, the safety of passengers and crew.
Supply and demand, safety and efficiency are perhaps the more obvious weather-related risks and opportunities. Accurate weather forecasts can also help mitigate threats to businesses' reputations as well as settle contractual disputes and legal claims, while skilful climate predictions increasingly influence long-term investment decisions. With the Met Office onside, instead of expecting weather downtime businesses such as onshore and offshore wind-farms can plan ahead for weather windows. This calls into play Met Office science, modelling, and unique applications which all help developers to select the best wind-farm sites across Europe in the first place and maximise output.
Benefiting from 21 years of wind climatology from the Met Office, energy companies can make the case for investment safe in the knowledge they'll generate enough electricity to service their loans and, literally, turn a profit. With almost half of all the UK's renewable electricity coming from the wind these days, this can mean big business.
Businesses and governments are also planning even longer term by putting in place climate change adaptation strategies with the Met Office's help. The Met Office has been working closely with the Environment Agency and other organisations to look at whether the Thames Barrier will hold fast and continue to protect London and the estuary communities from flooding. This project, and others like it, take in a spectrum of environmental risk beyond the weather and climate and see the Met Office building new partnerships with other scientific disciplines to begin to provide even more comprehensive risk management advice to the UK and the world.
- First published in Business Reporter May 2012 distributed within The Sunday Telegraph 20 May.