Extreme Weather Is Now a Board-Level Risk

Heavy snow in Nashville. A warm snap on the West Coast. Floods across Asia, Europe and Africa — and wildfires raging across the Southern Hemisphere. Already, 2026 has seen major swings in temperature and precipitation — part of a growing pattern of extreme weather affecting the world.

But this isn’t solely the domain of government policymakers and municipal leaders, struggling to clear streets of snow; or insurance companies, determining whose claims to pay out. This is an issue for the boards of companies, both public and private, now and for the foreseeable future.

According to research, the United States has experienced 426 weather events since 1980, each of which crossed the threshold of $1 billion in damage, reaching a total of $3.1 trillion in damage.1 The frequency of such billion-dollar-plus events has also skyrocketed, reaching an average of 23 per year since 2020 — up from 7.2 between 1980 and 2019.2

In light of this, it shouldn’t be surprising that the private sector is increasingly interested in understanding and trying to predict weather.3 Weather software, service and data providers are growing, but data is just one piece of the picture. Understanding how to position a company to understand and hedge against this threat is a strategic imperative for boards of directors. Boards must be asking the right questions and utilizing a framework that positions increasingly severe weather as a material business risk.

A Question of Risk

If you sit on a corporate board, extreme weather is no longer a distant risk: Annual insured losses from extreme weather events more than doubled between 1994 and 2024.4

And these events aren’t isolated headline grabbers; they translate directly into:

  • Physical damage to assets and operations
  • Supply chain disruption
  • Insurance cost spikes and capacity constraints
  • Volatility in earnings and capital allocation

For companies focused on protecting shareholder value, weather risk must be part of strategic planning, capital budgeting and disclosures. Too often, discussions about environmental matters become entangled with broader sustainability and compliance frameworks. As a result, decision-making can drift toward responding to shifting regulatory environments rather than focusing on the fundamentals: understanding risk and protecting enterprise value.

While researchers and policymakers debate the veracity of future climate predictions and what constitutes material risk, extreme weather events are already having a tangible impact on companies’ bottom lines. So, boards must frame weather and climate issues in terms of risk, addressing key questions such as:

  • What is the probability of an extreme weather event happening?
  • If extreme weather occurs, what potential cost does it represent to the company (e.g., office, manufacturing, distribution, supply chain and customers)?5
  • Will insurance cover these costs fully? What are the limitations of insurance, and what trends in insurance practices could expose the company in the future?
  • Are there any hidden or second-order effects of extreme weather that have not yet been accounted for?
  • What measures can be taken to safeguard against and/or mitigate risk?

Preparing for extreme weather is not just a reputational exercise. On the contrary, performing thorough analysis of climate and weather issues is responsible governance and will signal that a company and its board are serious about tackling matters that have the potential to pose material risk. In turn, boards will convey credibility, thereby ensuring effective operations and governance and attracting investors and capital – regardless of the discourse present in Washington at any given point in time.

Key Takeaways

The proliferation of extreme weather in the United States and abroad means that any company serious about risk should be monitoring this space. Below is a broad framework for how companies can prepare (and continuously iterate on and improve their approach):

  • Understand Existing Practices and Determinations of Risk: Identify who in the organization is responsible for monitoring weather and climate-related risks. Understand what analysis has already been completed, what material risks your organization has identified and what data and analytics are being utilized to support current practices.
  • Identify Gaps: Determine how further analysis can be performed to identify climate risks and mitigants. Ensure that various climate change scenarios and resilience mechanisms beyond insurance coverage are evaluated to harden assets, develop alternative operational and supply chain practices, and understand workforce implications.
  • Address Gaps: Set expectations with company leadership around addressing gaps in the governance of and preparation for climate-related risks. Best practices in climate- and weather-related risk management will continue to evolve. Boards should conduct periodic reviews of the company’s practices to make sure they evolve as well.

Though by no means exhaustive, the above steps will go a long way in helping boards tackle weather and climate issues from the perspective of risk. Through a targeted and tailored approach backed by rigorous analytics, companies will be able to successfully address the very real (and rising) costs of extreme weather while still protecting value and building resilience along the way.

Footnotes:

1: Climate Central, “U.S. Billion-Dollar Weather and Climate Disasters,” (Accessed February 27, 2026).

2: Risk & Insurance, “Extreme Weather Emerges as Top Business Risk, With Billion-Dollar Disasters More Than Tripling in Five Years,” (September 15, 2025).

3: Meg Wilcox, “Private Companies Step up to Gather Weather Data for NOAA as Staffing Cuts Hobble Agency Forecasting,” (August 1, 2025).

4: Swiss Re Institute, “Sigma 1/2024 in short,” (March 26, 2024).

5: Deliang Chen and Gill Einhorn, “The resilience imperative: Why companies must adapt to a +1.5 degrees world,” World Economic Forum (June 24, 2025).

Related Insights

Related Information

Published

March 31, 2026

temp Key Contacts

Miriam Wrobel

Senior Managing Director, Global Leader of Environmental, Social and Governance (ESG) and Sustainability

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