In the Harvard Business Review, Risk Management article entitled “Severe Weather Threatens Businesses. It’s Time to Measure and Disclose the Risks,” authors Jean-Louis Bertrand and Miia Parnaudeau highlight how unexpected, abnormal weather events present a series of challenges, threats and risks to business operations, such as construction operations.
Abnormal weather disrupts the performance of 70% of businesses worldwide
Accordingly, Bertrand and Parnaudeau cite research that “…abnormal weather disrupts the operating and financial performance of 70% of businesses worldwide.” Adverse weather can decrease cash flow, force financial distress, and cause business failure, particularly in the construction industry that operates on tight cash flows and thin profit margins.
Defining relationships between financial variables and weather indices
Weather risk management in the construction industry and built environment centers on defining the risks to project stakeholders and project delivery — and to overall project success. The authors advocate defining relationships between financial variables, such as cash flows and profit margins, and weather indices, such as temperature, precipitation, and wind events.
Ill-equipped with actionable intelligence about risk exposure to weather variability
However, the authors remark how managers and executives are generally uninformed and ill-equipped with actionable intelligence about risk exposure to weather variability. Accordingly, one of the many root causes for a lack of actionable intelligence is a lack of reliable weather event data, to improve situational awareness and make better-informed decisions.
Leaps in big data and cloud computing are now empowering construction
Further, in the Harvard Business Review, Risk Management article entitled “Severe Weather Threatens Businesses. It’s Time to Measure and Disclose the Risks,” the authors highlight how relatively recent leaps in big data and cloud computing technologies are now empowering managers and executives with actionable intelligence about risk exposure to weather variability.
More in the next blog series about weather planning, Weather Controls® and weather risk management for the construction industry and built environment…
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