Extreme weather can cause physical damage and operational disruptions, low rainfall and droughts can prevent commodities and products from being transported on rivers and waterways, and water scarcity has the potential to impact most manufacturing processes.
Sinking water levels in the Rhine, extensive wildfires in Canada, and the 2021 Texas freeze highlight the climate-related supply chain vulnerabilities facing businesses. And all of these issues that impact assets and operations can also severely impact people and the communities in which they live.
In this new normal, many companies, especially those in industries with high supply chain risk exposures, are prioritizing climate risk management and building supply chain resilience.
What supply chain professionals and risk managers can do
Some organizations are adapting to climate change by boosting their inventory to buffer against shocks, while also working to alter the layouts of their networks to address vulnerabilities. Changes to global supply chain structures, however, are still in the early stages.
For risk management professionals, risk quantification and scenario analyses need to happen cross-business and between teams, as…
