How Infrastructure failure could immobilize commerce
As natural catastrophes continue to worsen every year, exacerbated by climate change, companies urgently need to plan for how hazards will impact the infrastructure they rely on, such as highways, airports and power grids. The dangerous combination of aging infrastructure and climate volatility have an increasing potential to disrupt the supply chains our economy depends on—and it won’t take a cataclysmic event to do so.
Utilizing our digital twin, One Concern Domino™, and our resilience benchmarking product, One Concern DNA™, we reviewed 440 logistics, distribution, and big-box retail properties in California, Louisiana, and Florida. Rather than building damage due to hazards, we found power, community, and bridges were likely to be the most significant contributors to business downtime in a natural catastrophe. The issue only worsens with climate change.
Our analysis showed that infrastructure downtime is expected to cause significant business disruption, even during seemingly manageable wind, flood and seismic hazards of less than 250-year return periods. Notably, buildings with minimal damage are still expected to be rendered inoperable due to dependency impacts, the infrastructure a business relies on to function, such as power grids. To illustrate the issue, we will drill down on an important retail hub for a community in rural Louisiana.
Building Damage: 2%
A retail facility hit by a 1:250 year wind event suffers effectively no building damage. Traditional GIS-based risk modeling would tell us this property is safe from downtime, but that fails to consider dependency impacts to operability.
Power Downtime: 67 Days
This facility will be inoperable for over 2 months due to power downtime despite minimal building damage. Power grid vulnerabilities leave even well-constructed facilities exposed.
Community Downtime 70 Days
Although the building itself is estimated to be virtually untouched, employees are expected to face significant damage to their own homes for 67 days, making it likely they would be unable to work as they repaired their homes or found temporary shelter.
Yesterday’s infrastructure can no longer withstand the impacts of climate change. The 2020 Texas winter storms, which cost the state approximately $130 billion (Texas Comptroller’s Office, 2021), illustrate the devastating results extreme weather events have on the economy.
Immobilized commerce triggered by dependency risk is widespread. Many of the properties we considered in the analysis were at-risk of debilitating downtime, although over 60% would not suffer significant building damage. Building damage is a serious consideration for asset owners, but it’s not the only concern when attempting to mitigate the risks of climate change to businesses and communities. To effectively climate-proof a portfolio, we need to consider dependency risk.
Traditional understanding of risk is a binary assessment of an individual asset: is a building damaged or not? One Concern’s dynamic resilience modeling challenges organizations to think beyond this binary posture to a spectrum approach that allows them to truly understand the realities of dependency risk. As climate change intensifies, building damage isn’t the only vulnerability companies will face.
By identifying and quantifying the full spectrum of dependency risks, we can minimize the impact of hazards and downtime during extreme weather events, allowing companies to better serve their communities and maximize their ROI.
Climate-proofing is now within our reach. Understanding the vulnerability of external dependencies allows for more effective risk mitigation, site selection and better preparedness. Companies can target their mitigation to the facilities most at-risk of downtime due to hazards, select resilient sites and face an uncertain future, prepared.