On March 24, a tornado spawned by a severe weather system touched down in Mississippi and tore a path of destruction three-quarters of a mile wide for nearly 60 miles. The tornado’s winds peaked at 195 mph, and the storm system decimated towns across the state, claiming 17 lives1.
Extreme weather events like this system are becoming more severe and increasingly costly. The total cost of billion-dollar disasters from 2017-2021 was $742.1 billion, or an average of $148.4 billion a year — triple the inflation-adjusted annual average of weather disasters for the previous 42-year period.2
In 2022, weather disasters cost a total of $176 billion in damages – after totaling $158 billion in 2021. Severe weather in 2023 has already cost more than $32 billion in damages over the first six months of the year.3
Tropical weather and severe thunderstorms (including the hailstorms and tornados they produce) have accounted for most billion-dollar disasters. This underscores the need for businesses of all sizes to understand the threat and prepare for weather events to protect lives and property.
View extreme weather risks are increasing infographic
Peak activity and patterns
Thunderstorms: The period of greatest threat of thunderstorms can vary, depending on the region. Typically, severe weather strikes the central portion of the United States through spring and early summer. States in the South, such as Alabama, Mississippi and Florida also have a secondary severe weather season in November and December.4
In spring and summer, the clash of cool air from the north and warm, moist air from the Gulf of Mexico creates conditions that spawn severe thunderstorms in the central part of the country.5 The combination of daytime heating, atmospheric instability, and moisture in the air leads to the development of strong storms.
Tropical weather: The season for tropical storms and hurricanes runs from June 1 through Nov. 30. Tropical weather in the Atlantic Ocean and Gulf of Mexico, typically begins forming in early August, and the season peaks in late August to mid-September. An average Atlantic Basin season has 14 storms with seven hurricanes and three major hurricanes.6
Global climate patterns can have an impact on the development of tropical storms. El Nino and La Nina, the cyclical warming and cooling respectively of the eastern Pacific Ocean near the Equator, are two prominent climate conditions that can influence development of tropical storms.7 It’s been observed that El Nino suppresses tropical activity in the Atlantic basin and La Nina conditions tend to enhance activity.8
El Nino conditions are occurring in 2023, however, warmer surface-water temperatures of the Atlantic Ocean could counter the effect of El Nino and weather prediction centers are calling for an above-average hurricane season.9
Defining the threat
Severe thunderstorms are defined as thunderstorms that produce 1-inch hail or larger and/or strong wind gusts of 58 mph or greater. Severe hail that is 1 inch in diameter is roughly the size of a quarter.4
Straight-line winds, flash flooding, hail, and tornados produced by severe thunderstorm systems can all produce widespread damage.
- Tropical Depression: A tropical cyclone with maximum sustained winds of 38 mph (33 knots) or less.
- Tropical Storm: A tropical cyclone with maximum sustained winds of 39 to 73 mph (34 to 63 knots).
- Hurricane: A tropical cyclone with maximum sustained winds of 74 mph (64 knots) or higher
- Major Hurricane: A tropical cyclone with maximum sustained winds of 111 mph (96 knots) or higher, corresponding to a Category 3, 4 or 5 on the Saffir-Simpson Hurricane Wind Scale.6
Effects on businesses
Frequency and severity of severe weather is having a growing effect on lives and businesses. Hurricane Ian alone killed more than 150 people and caused more than $109 billion in property and infrastructure losses10 in 2022.
An analysis of annual reports over the last 30 years shows that weather is increasingly mentioned as having an impact on business results.11 In 1994, the report shows that only 25% of businesses mentioned weather as impacting business results. By 2018, that segment climbed to 65%, indicating a growing impact across a wide range of industries.
This underscores the need to plan for the threats that weather poses. Effects of severe weather can vary from the immediate physical damage to longer-term impacts that can hamper results.
- Property damage – The most obvious result of severe weather is physical damage to buildings and infrastructure. Roofs, windows, outbuildings, awnings, canopies, signs, skylights, and utility connections are just some of the structural components that should be safeguarded against potential damage. Property owners can review structures and ensure they meet current or enhanced building codes to help them resist extreme weather.
- Labor and supply shortage – These effects can linger and continue to impact business results long after the storm. Businesses can suffer even if they have not sustained physical damage. Labor shortages can impact industries such as construction due to workforce supply and demand as an area recovers and rebuilds. Evacuations can also displace workers and make it difficult for businesses to operate at full capacity. In addition, damage to infrastructure like roads and bridges, or central shipping facilities can disrupt supply chains and make it difficult to resupply and move goods into a market.
- Business operations and continuity – Flooded roads, disruption to the power grid, physical damage, or scarcity of workers can all disrupt business operations. This can in turn hurt a business’s bottom line. It’s important for businesses to have a clear understanding of the threats they face, and the roles associates play so operations can be restored as soon as possible after a storm.
Protecting lives and property
Any business can be impacted by severe weather, and a comprehensive risk management plan should be developed to address the specific risks each business faces.
It’s critical that companies build resilience to extreme weather into their operations. Damage and operational disruption resulting from extreme weather can have a significant impact on organizations, and the persistent inflation has made rebuilding even more expensive.
Nationwide has resources that help businesses address the risks they face. A good first step is to develop a business continuity plan. This can help identify exposures and take action to mitigate the effects.
Here are resources that can help businesses understand the weather threat and implement protection strategies:
Materials on mylosscontrolservices.com can be shared with customers to help educate them about severe weather events, prepare for emergencies, and establish business continuity plans.