With climate risks increasing and ocean temperatures at unprecedented levels, businesses may need to prepare for record-breaking North Atlantic hurricanes at unusually earlier or later times of the year, according to Dr. Nicholas Leach, climate scientist at Climate X, a global climate risk analytics provider and researcher at the University of Oxford.
Speech at the GlobalData Conference Instant insights In his podcast, Leach explained that Hurricane Beryl, the earliest Category 5 hurricane ever recorded when it made landfall in July as part of the 2024 season, highlighted how the Atlantic hurricane season will change in the future.
“We define a hurricane season as a period that falls between those months, but as sea surface temperatures increase, that season will expand,” Leach said. “So people need to be aware that the risk is not zero out of season and we could see more of these very intense hurricanes early in the season and later as well.”
The Atlantic hurricane season, which runs from June 1 to November 30 each year, is the time when tropical and subtropical cyclones are most likely to form over the North Atlantic. In the past, there have been deadly hurricanes such as Hurricane Katrina in 2005 and Hurricane Harvey, each of which caused over $150 billion in damage.
The 2024 hurricane season is forecast to be particularly active due to a combination of record-breaking sea surface temperatures and other conditions such as an early La Niña phenomenon. Approximately 17 to 24 named storms are forecast, of which four to seven could develop into major hurricanes.
Although the 2024 hurricane season has not yet met predictions, Leach said it is too early to say that forecasts may have overestimated the number of hurricanes, as the season is expected to peak next month, in September.
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Impacts of hurricanes
Ian Palao, vice president of strategic energy services and in-house meteorologist at Powwr, a global energy and utility software provider, also described in the podcast the impact of record-breaking Hurricane Beryl, which left more than 2.5 million homes and businesses without power in Texas and damaged urban infrastructure in some Caribbean countries.
“This storm has knocked down countless poles, power lines and transformers,” he said. “CenterPoint Energy and their various suppliers have made a great effort to restore everything to its original condition and make it even more stable.”
“At the end of the first week, I think there were just over half a million people without electricity. And the following week, there were about 100,000. That’s a lot of work when you consider how many pylons and how many kilometers of cables have to be laid.”
Economic challenges
Hurricanes pose a risk not only in terms of immediate damage to infrastructure, but can also disrupt power supplies and have long-term negative economic consequences for businesses, Leach noted.
Both he and Palao stressed the importance of strengthening corporate resilience in the face of these risks.
“Businesses and operations can first and immediately prepare by trying to understand the risk, be aware of it and take it into account,” Leach said. “The next step is to actually use that information to create disaster preparedness plans – if a major hurricane were to hit the area around my operation or the area where my operation operates, what impact might that have?”
Palao explained that financial instruments such as weather derivatives can improve corporate protection, adding: “Even if they don’t stop the hurricane, they limit financial risk – from lost revenue to loss of cash, reconstruction efforts, loss of employees or other losses.”
