How Weather Can Affect Your Business

4 Mins read

How Weather Can Affect Your Business

If you haven’t already done so, it could be a good time for your business to invest in business continuity and contingency plans that relate to the effects of extreme weather.

2021 brought a number of challenges, and among those were severe weather events. For example, the Midwest region just experienced tornadoes in December, and flooding in China caused supply chain disruptions throughout the year. Droughts and fires also happened around the globe in 2021.

A business can do things to help minimize some of the impacts extreme weather might have, such as using an Uninterruptable Power Supply (UPS), which can help if there are electrical issues.

Employers can also have plans in place for employees to work from home in certain weather conditions, and they can have backup plans for supply chain vendors.

Before you can start to specifically think about what your business needs, though, it’s important to fully understand the potential impacts weather might have.

It’s something that more businesses are looking into and building into continuity and contingency plans to stay resilient. If the past two years have taught businesses anything, it’s that they have to expect the unexpected in every conceivable way.

The Effects of Weather on the General Economy

To start getting an idea of how weather can affect a business, you can look at how it affects the economy as a whole.

Large-scale economic effects of extreme weather events include:

  • Lost Productivity: When there are storms and weather events, workers can’t make it to their jobs. That’s going to lead to revenue declines and lost productivity. Getting employees back up and running again when they return can also create its own lag times. There’s also general lost revenue because if employees can’t make it to work, consumers probably aren’t going to be out and about spending money in the ways they normally would.
  • Sales Spikes: While consumers might not be out shopping during weather events themselves, it can lead to panic buying before and after the event, and that can affect inventory and supply chains. Extreme weather creates a sense of fear for many people, so items like nonperishable foods, batteries, and water are in high demand. That’s usually a temporary effect, however.
  • Innovation: Some good things can come out of weather events. For example, there are instances where these events can trigger innovation as businesses and individuals work to prepare for similar events in the future.
  • Handling the Damage: Sometimes, in an effort to clean up and deal with the aftermath of weather events, there can be new jobs created at the local level. While that might seem like a good thing, there is a severe labor shortage right now, so a weather event could put even more stress on that.

According to research, abnormal weather disrupts the financial and operational performance of 70% of businesses worldwide.

Each year, variability in weather costs an estimated $630 billion just in the U.S., or 3.5% of GDP.


The Impacts of Weather on Individual Businesses

Above, we talked about the large-scale economic effects that can stem from weather events. Below, we talk more about how it can affect your business on a smaller scale, although there are some overlaps.

  • Customer behavior changes throughout the year. For example, if you live in a place that gets a lot of snow, you probably already realize how much weather impacts the patterns of customers. You want to think about buying habits and how weather affects your customers as you’re planning not just for continuity but also to optimize sales.
  • Prices can fluctuate because of the weather. For example, if your business relies on agricultural yields or certain seasonal raw materials, you need to factor fluctuations, which are often driven by weather, into your financial projections.
  • How you schedule employees should be done with consideration to potential weather fluctuations.
  • Property destruction from floods, winds, storms, and other weather events could be costly and disrupt your operations.
  • Severe weather can disrupt communication systems and the availability of water and power supplies.

How to Be Resilient

Many companies are working on navigating extreme weather events and building a sense of resilience. The following are some tips and things to keep in mind:

  • Understand the risks that are specific to your business. From there, begin to audit your exposure and your particular vulnerabilities in your operations, supply chains, and communities. You need to be aware of risks to have a plan to do with them accordingly. From there, you’re better prepared to set goals for risk mitigation and identify new ways to address challenges.
  • Conserve your cash. Think about cutting costs wherever possible so that you’re prepared for whatever might come your way.
  • Have an emergency plan and schedule regular drills to see how it works when put into practice. Train employees on what their role is within this plan.
  • Do an assessment to figure out the most mission-critical operations in your business because this will be where you need to focus your recovery efforts.
  • Make sure that your files and data are always backed up. Thanks to the digital transformation and the move to the cloud, many businesses are already ready for this.
  • We’ve talked about employees working remotely, and you need to make sure that you’re considering what they’ll need to be prepared to do this with little notice. As long as employees have power, they should be ready to work remotely whenever possible.

A lot of analysts and experts are pushing for more public-private collaboration to address issues surrounding severe weather and how they have the potential to impact businesses and the economy. For example, companies need to manage their risks and understand how these affect their direct facilities and supply and distribution chains. Still, many feel the government should also be helping build out the public infrastructure in a way that supports them.

Make 2022 the year you plan for all possible situations that could impact your business, including weather events.

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