How businesses can improve their resilience amidst increasing extreme weather events

The wildfires throughout Western Canada from this May to July were another stark reminder of the damage and disruptions caused by emergencies. These extreme weather events take a toll on people, on properties, on the environment – and on businesses.

New research by KPMG shows that 93 per cent of Canadian decision makers surveyed are worried their businesses will be affected by extreme events this year. A majority said their operations were impacted last year, including shutdowns of operations, lost productivity, breakdowns in supply chains, increased costs, physical damages and reduced profits.

With extreme weather now the norm amid the deepening impacts of climate change, the recipe for averting disaster is preparation. Despite widespread awareness of the ominous threats and the consequences, not all businesses are taking sufficient action.

"There hasn't been equal focus on emergency preparedness to deal with risks," says Roopa Davé, partner and national climate risk leader at KPMG.

The KPMG survey found that while nine in 10 business leaders know planning is required, only two-thirds (68 per cent) said they're preparing for extreme weather emergencies.

There's a widespread disconnect between climate-risk planning and emergency preparedness in Canadian corporations, Ms. Davé says. "These are often siloed. The climate-risk team is assessing long-term concerns like meeting net zero commitments, while operations management is thinking about near-term emergency planning. Without a big picture on climate-change impacts, the perspective is often too myopic."

The climate-risk and operations teams must plan together – the sooner the better, as extreme weather impacts are increasing in frequency and cost every year.

Statistics Canada reports that insurance claims from catastrophic weather events were in the hundreds of millions of dollars annually at the end of 2010. Now, claims cost multiple billions of dollars annually. In 2024, claims reached a record high of $7.1-billion, driven by extreme weather events such as the wildfires that nearly consumed the town of Jasper, Alta.

"Until about five years ago, disasters happened periodically, maybe every few years. Now, they're really occurring every year," says Leon Gaber, national lead for KPMG in Canada's critical infrastructure resilience and emergency management practice.

The responsibility for dealing with disasters has mostly fallen on government, but the private sector must play its part, and many businesses are not ready. "When we evaluate businesses' plans, they often fall well short of what's needed," Mr. Gaber says.

He adds that while most companies have emergency plans, they are often out of date. "Many consider dealing with event X - a wildfire - and that's it. But organizations now must contend with separate disasters in the same year."

One silver lining is the array of meaningful climate and weather data, along with innovative technologies to help businesses plan better. Climate change modelling data is widely available (and free) from the federal government and international organizations, though most businesses lack the expertise to interpret the data.

"That's where we work with clients, helping them understand what the data means for them," Ms. Davé says.

Even with that understanding, the challenge remains effective planning. Companies must address the direct impact of disasters, and they also need to consider the indirect effects on supply chains from extreme weather thousands of kilometres away, or the impact on workers' health caused by poor air quality from wildfire smoke.

Mr. Gaber points to the power of artificial intelligence, big-data analytics and the Internet of Things to enable companies to plan better. For example, an organization can create a 'digital twin' of its operations.  

"Digital twins mirror conditions in real-time, while enabling companies to simulate the impact of disasters and how planned mitigations will hold up," he says.

Investing in technology, comprehensive planning and mitigation measures involve increased spending. But it pays off. "As the costs of climate change mount, it pays to be prepared. Every dollar spent on adaptation measures today saves up to $15," the Government of Canada notes.

But business leaders often feel they have more pressing concerns. "Over two thirds cite recession fears stemming from ongoing tariffs as the main reason for reducing investments in climate-risk", Ms. Davé says.

Companies ignore one risk at the expense of another. "These aren't 'what if' scenarios," Ms. Davé adds. "They need to plan better today because, unfortunately, disaster will inevitably strike."