Climatic variability will almost certainly drive both operational and strategic risks in the coming years. Climate models show it is likely that El Nino thresholds will be met or exceeded during the southern hemisphere winter later this year.
This assessment was issued to clients of Dragonfly’s Security Intelligence & Analysis Service (SIAS) on 4 May 2023.
- Climate variability and extreme weather events are highly likely to drive operational and strategic risks for businesses in 2023
- Meteorological agencies are advising that there is a high chance of an El Nino event later this year
- El Nino is very likely to exacerbate climate hazards such as flooding, drought and heatwaves
Climatic variability will almost certainly drive both operational and strategic risks in the coming years. Climate models show it is likely that El Nino thresholds will be met or exceeded during the southern hemisphere winter later this year. The US National Weather Service has said there is a 62% chance of El Nino between May and July. If an El Nino event occurs, the phenomenon will almost certainly impact climate conditions globally until 2024 at least, including by changing rainfall and temperature patterns.
El Nino likely in the coming months
El Nino is a weather phenomenon affecting Pacific sea temperatures. It usually lasts between six months and two years. In some contexts, the direct impacts of an El Nino event include an increased risk of heavy rainfall and flooding, while in others it will mean a greater risk of drought. These consequences will probably be especially pronounced in Asia Pacific, East and Southern Africa, Latin America and the Caribbean, where accelerating climate change is already contributing to climate variability and extremes.
If a strong El Nino does occur, this would probably increase the likelihood of severe climatic hazards globally including flooding, drought, heatwaves, wildfires and cyclonic activity. This is based on historic trends (as outlined in the map) and is despite the impacts of an El Nino varying between events. El Nino is likely to pose additional operational and financial risks for businesses, especially in the areas highlighted in our map.
Associated climatic hazards will probably have widespread consequences, including water scarcity, crop failure, pests and diseases, loss of livelihoods and infrastructure, and heat-related limits on labour productivity. An extremely strong El Nino episode in 2015-2016 affected more than 60 million people globally. Impacts included severe drought in Ethiopia causing 80% of the harvest to fail and the displacement of 100,000 people in Paraguay due to unprecedented flooding.
Cascading impacts driving security and stability risks
An El Nino event is also likely to contribute to systemic risks in the long term. This includes energy and food insecurity. It would also exacerbate the impacts of climate change-induced climatic hazards on countries. For example, the extremely strong El Nino event in 2016 contributed to it being the warmest year on record.
Businesses will almost certainly have to consider how climate-related hazards contribute to security and stability risks in their strategic planning. The direct operational disruptions posed by climatic change, for example, are relatively well known. But the indirect and cascading impacts of increasing climate variability and extremes, such as how the global climate interacts with and exacerbates pre-existing drivers of wider geopolitical and security risks, are generally less well understood.
According to research by Chatham House (see the diagram at the top of the report), systemic cascading climate-related risks have the potential to fuel instability in the following areas in the coming decades:
- Energy security
- Food security
- Health crises
- Migration pressures
- Economic and trade disruption
- National and international security
We concur with those conclusions. But the inherent complexity of systemic risks makes assessing their probability and severity challenging to do with any high degree of accuracy or confidence. Countries and territories most vulnerable to these cascading consequences are those with heightened:
- Governance risk
- Infrastructure risk
- Public health & infectious diseases risk
- Civil unrest risk
- Poverty rates and distribution of wealth and resources
- Fragility of food systems
- Economic diversification
- Dependence on international trade and supply chains
This is likely to include – but by no means be limited to – countries highlighted on the map.
Image: Residents work to push back wet mud that trapped cars and invaded some houses on 11 January 2023 in the small unincorporated town of Piru, east of Fillmore, California. Photo by David McNew via Getty Images.
