How Businesses Predict Climate Change Risk Using A Geographic Approach

How Businesses Predict Climate Change Risk Using A Geographic Approach

How Businesses Predict Climate Change Risk Using A Geographic Approach

Already reeling from the impact of the pandemic, supply chain disruption, and geopolitical trade conflicts, many business leaders are preparing to face the biggest disruptor yet: climate change.

Climate disruptions are fundamentally geographic in nature, so businesses are starting to take a geographic approach backed by data science to understand where climate threats like sea level rise, excessive heat, and extreme weather are creating operational vulnerabilities.

By visualizing data layers on a map, business leaders can see how complex events across the globe are impacting assets. In the context of climate change, visualization enables us to see specifically where and when damage might occur. We can then understand the scope and scale of potential damages, forecast different scenarios, and make sound decisions to reduce risk.

By using geographic information systems (GIS) software, organizations can see patterns and connections that would be lost in a spreadsheet.

A modern GIS can not only integrate and analyze diverse climate-related data sets, but it brings the physical world into the core of that analysis. Companies can use it to understand the interconnectedness of Earth’s many systems—equipping them to become more resilient, even as climate-induced changes begin to accelerate their impact on the business world. Just as the world saw the power of map-based dashboards that tracked COVID-19, businesses are realizing they need a map-based understanding of climate change threats to their assets.

How are companies already using GIS-powered models with climate? To simulate climate-related events and see when and where damages and losses are likely without intervention. With this information, planners can devise strategies for maintaining operations and protecting strategic assets.

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“You need to have your eyes on your entire system,” said Stephen Bourne, a lead resilience modeler, engineer, and project director with engineering, design, and project management firm, Atkins. In a recent podcast, Bourne called this approach a form of “futureproofing.”

To do this effectively, businesses today must be able to explore hazards; assess risk; investigate possible solutions; and weigh the costs and benefits of each option. GIS simplifies this process by integrating these elements—we can map assets, analyze them, visualize, engage, and take meaningful action, all from the same system.

How Businesses Predict Climate Change Risk Using A Geographic Approach

“You need to identify all of the climate change impacts that you are likely to see,” Bourne said. “And then you need to simulate what’s going to happen to your system in the future. Just having that simulation in place means that you’re measuring both phenomena, which I think is essential.”

A Port’s Digital Twin Shows Stress Points

Such predictive models are in place at Port of Prince Rupert, Canada’s third-busiest seaport and North America’s closest docks to Asia. Traffic to and from the port that includes ships, rail cars, and trucks has increased by more than 100 percent over the last decade, pushing international cargo to a record 32.4 million tons in 2020.

To provide crucial levels of transparency for decision-makers across operations, Bourne’s team produced a digital twin of the port as it will be in the future, based on expected growth and development. Port stakeholders integrated proprietary data, along with notations on areas prone to high winds, extreme temperatures, or landslides. Then, Bourne’s team used GIS technology to simulate worst-, median- or best-case scenarios that show how stress points might hold up against extreme weather or other incidents.

These visual, geographic presentations of data are powerful ways of communicating about risk.

“We can simulate and quantify down to the level of the person, the neighborhood, or the individual building – what is the impact that we're looking at, and how can we improve it?” Bourne said.

Strategic City Recovery and Future Loss Prevention

In Fayetteville, North Carolina, a city with close ties to US defense, generating options for recovery was just as important as preventing future losses; Atkins’ team used location intelligence from a GIS to address both concerns when 30 dams failed in 2018 during Hurricane Matthew.

As the storm raced through Cumberland County, movement across the county’s transportation system stalled as bridges, roads, and homes flooded. The weather event threatened Fayetteville’s neighbor Fort Bragg, one of the largest military installations in the world. Fort Bragg is home base for more than 52,000 active-duty soldiers and 12,000 reservists and temporary-duty students, as well as nearly 100,000 army retirees and family members.

In response, Atkins’ team created two scenarios for recovery and future loss prevention. The least costly idea, estimated at $55 million, included shoring up the bridges which could reduce lost productivity and offer other benefits, Bourne explained in a recent presentation. Recognizing the potential for repeat costs of this scale, planners distilled an important message from the risk models: the need to invest in resilience. “Resilient cities recover faster after a disaster,” said Bourne, who explained that returning to the same level of prosperity that existed before an incident can take decades in less resilient operations.

Uncovering Opportunity within Data

Forecasting based on a geographic approach that incorporates location intelligence has also helped a major coffee producer identify expected supply chain deficits before disruption due to climate change occurred.

When company executives learned Arabica beans could be wiped out in some countries by 2050, they accelerated a program to promote sustainable growing practices among the thousands of farmers the company works with. That business now uses GIS to track program compliance. Dashboards allow customers and stakeholders to visualize the company’s progress.

Service industry companies also use location-based prediction to become more resilient. At a major telecommunications company, weather-related repair and recovery costs reached more than $800 million across its vast network between 2016 and 2018. Subsequently, the business used GIS to predict which of its assets—from cell towers to base stations—were more susceptible to flooding. As a result, new policies are taking shape to prevent losses from multiplying and to minimize service interruptions.

Few industries are more focused on risk than insurance, and insurers are now using geographically enriched predictive modeling as a tool for futureproofing against increasingly severe weather events.

Consider that in 2017, insurers paid out a record $135 billion around the world after hurricanes Maria and Harvey swept through parts of the US and neighboring island nations. In the US, total damages of $307 billion have been reported. Insurance companies now use GIS combined with imagery to respond to claims and then more accurately anticipate where and when weather events may strike to adjust their rates accordingly.

In many organizations there is still much work to be done to raise the level of resiliency in operations, Bourne said; it’s a process that can invite innovation from across the enterprise.

“Assessing vulnerability helps [companies] build their knowledge and build their resiliency as a result,” said Bourne, who adds that merely overcoming the challenges presented by climate change is not enough for today’s executives. “Overcoming those challenges in the most cost-effective way is what they're after.”

To learn more about how GIS and a geographic approach can help leaders manage climate change-related risks, visit esri.com/en-us/about/science/initiatives/weather-climate-science.