Managing the Risk of Natural Disasters

We are facing a global climate crisis. Each year, the number of natural disasters and severe weather events — from devastating floods in Europe and Asia to deadly wildfires in North America — continues to increase.

According to a 2020 report from the United Nations, there were 7,348 natural disasters in 2019. That is almost double the 4,212 natural disasters that impacted the world in 2000.

These events often have severe consequences, destroying communities and devastating families. They can also be detrimental to businesses, causing physical and financial damage and impacting a company’s day-to-day operations. To mitigate these risks, processes must be in place to protect a business. But what can a project manager do to make sure these threats are reduced so that operations can run smoothly?

“The first thing to do is to get informed,” said Professor Stephan Harrison, a director at Climate Change Risk Management (CCRM). “A lot of businesses don't really understand the risk because they don't have a handle on the magnitude and frequency of large events.”

For example, if a business has infrastructure at sea level, they may want a better understanding of what to do if water levels increase.

“We can run flood models and assessments of sea level rises to help them better understand what the likely risks are going to be,” said Harrison. “But all these issues depend on the fact that we've got our magnitude and frequency relationship right.”

That relationship can help the business better determine what kind of risk they are willing to accept. 

“Businesses might say ‘look we're happy to accept the risk if it's less than one in 100 years,’” he said. “They might say that they are quite happy to build infrastructure at or near a floodplain, but the problem with that is the assumption that we understand the frequency of large floods.” However, understanding this scope is difficult because we don’t have 100 years of records to see.

“People often say, ‘oh no, we're okay, we're going to be fine because we've been told by our flood engineers this infrastructure is resilient to a once in a 300-year flood,’” he said. “But I immediately say, ‘will you know what a 300-year flood looks like?’ Our understanding of natural variability is really quite poor.”

Improving Your Climate Literacy

To get informed about the risk of a project from natural disasters, it is important to become climate literate. One way to do this is by looking at climate scenario models to see what they say about certain locations using multiple methods.

“We always caution against people who only use one or two climate models,” said Harrison. “You really have to use a whole range of models and then work out where the models are clustering in terms of their outputs. It really requires a sophisticated understanding of what models can do and what they can't do and where the uncertainties lie.” 

One sophisticated scenario method is the general circulation model (GCM) used for predicting weather. This employs a mathematical model to simulate the physical processes of the earth’s atmosphere and oceans. But this method only operates at scales of about 100 by 100 km2 (38.6 by 38.6 mi2), and businesses are often very interested in an extreme event happening at a specific location on a small spatial scale. 

Regional climate models are also needed to give a more detailed specific look at an area. However, this method is not without limitations, there can still be a lot of uncertainties pinning down the exact impact of an event on a place.

“One river valley may respond completely different to a rainfall event or big flood compared to another river valley, that is almost next door,” said Harrison.

There is no one-size-fits-all approach. Rather what is needed is an adaptive management approach of learning by doing, according to Harrison. In this management style, problems are assessed and solutions are then designed, implemented, monitored, evaluated and adjusted.

If infrastructure is built near the sea and is at risk of flooding, managers need to think about more than just building a high seawall.

“You've got to make sure that the seawall you build can then be added to in the future if our sea-level projections become worse, which we expect them to,” he adds.

It’s More Than Just Physical Risk

Companies also need to look at natural disasters beyond just the physical risks as they also create huge social, cultural and political change.

“Businesses now must recognize that they will suffer enormous reputational damage if they are not doing something about climate change, or they will be seen as being on the wrong side of history as it were,” said Professor Harrison. 

To get a good grasp on all the risks, project managers will need expert advice — not just from climate scientists — but also from social scientists, cultural theorists and psychologists.

“They will be the ones who will help you understand where consumer thinking might be in the future,” said Professor Harrison.

Over the next few decades, climate models will most likely be the only way to produce plausible scenarios to understand the physical risks of natural disasters.

This is where they will need much more advice, but also Professor Harrison said that businesses will need to get “much more involved in the debate and become climate literate; otherwise, they're essentially making decisions with enormous uncertainty.”