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Climate Change and the Impact on Supply Chains

As extreme weather impacts global supply chains, industries must keep resources moving. Be it the flow of goods, electricity, communications or oil and gas, today's governments, global manufacturers, aid relief organizations and insurance firms are worried sick over supply chain disruptions. And it's easy to see why.

Take Thailand's devastating 2011 floods. Within months of the onset of the monsoon season, the nation's automobile industry had been wiped out leading to components shortages in the East, while disruption to many Japanese technology manufacturers led to a world shortage of hard disk drives.

According to Anders Levermann, professor of dynamics of climate systems at Germany's Potsdam Institute for Climate Impact Research, we can expect more supply chain fragility in the face of disruption. He has written that extreme weather, including Hurricane Sandy-scale storms, severe floods and droughts, is likely to become more frequent and intense as global warming accelerates. And as indicated by the Thai floods, long-distance links in global supply chains mean natural disasters in one place will have repercussions far and wide.

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