The MMI looks at a number of performance and sentiment topics for middle market companies, and climate is a new addition. The year-end data highlights the increasing frequency and intensity of extreme weather events, which are causing substantial disruptions to business operations. For instance, 22% of firms reported being impacted by natural disasters in 2024, with 20% experiencing significant operational disruptions. These disruptions not only lead to financial losses but also damage critical infrastructure, making it imperative for businesses to invest in resilient infrastructure to safeguard their operations.
Supply chain interruptions are another major ramification of extreme weather events. Climate change is causing delays and increased costs in the supply chain, affecting the availability of raw materials and impacting production schedules. Specifically, 54% of firms cited supply chain risks as a top concern.
In response to these challenges, businesses are increasingly conducting risk assessments to identify vulnerabilities and develop strategies to mitigate climate-related risks, including diversifying their supply chains and adopting sustainable practices. Insurance, too, plays a crucial role in managing these risks. For example, 55% of firms reported that their losses from natural disasters were covered by insurance. However, there is a clear need for more comprehensive coverage and a better understanding of the specific risks associated with climate change.
By investing in resilient infrastructure, adopting sustainable practices, leveraging technological innovations and working closely with insurance partners and other risk mitigation professionals, companies can better navigate and prepare for the challenges posed by climate change. Collaboration between businesses, governments and other stakeholders to effectively address these challenges and build a more sustainable future will be critical.