The business case for resilience: A risk imperative

Editor’s note: Check out some recent insights into climate resilience in a new Optimistic Outlook podcast, “From risk to readiness: How climate resilience is reshaping business decisions."

In an increasingly volatile market environment, organizations face mounting exposure to interconnected risks. Physical hazards, including natural disasters, pose direct threats to operational continuity and financial performance, eroding organizational resilience. These external market dynamics increase the complexity of the risk landscape, requiring businesses to prioritize mitigation strategies to maintain competitiveness in a rapidly transforming economy.

As I step into my new role as Chief Executive Officer—transitioning from Chief Risk Officer at SFS, Inc.—I'm struck by how both positions now demand the dual responsibility of a Chief Resilience Officer. In risk management, we are trained on the defense to quantify exposure, assess probability, and calculate expected loss. On the business-growth side (offense), the focus is on the opportunity to advance and compete. Doing nothing to adapt to market forces poses both material threats to existing business and thwarts any chance of competitive progress.

Recent research reveals a compelling correlation between protection against natural hazards and increased business performance. Companies that successfully optimized their business by mitigating natural hazards and benchmarking emissions to compete in the global supply chain are seeing noteworthy results. The data does not just show missed opportunities, but genuine enterprise risk that boards ought to treat with the same rigor as cybersecurity or regulatory compliance.

• 50 percent of resilience-focused companies achieve annual revenue growth exceeding 10 percent. (1)
• The International Labor Organization (ILO) estimates that by 2030, the equivalent of 80 million full-time jobs will be lost due to heat stress. (2)
• According to Gallagher Re, $263 billion of disaster-related losses went uninsured in 2024, representing 63 percent of total economic losses. (2)

This data reflects a fundamental risk principle: organizations that address tail risks before they materialize create competitive advantage and shareholder value, making this a growth story as well.

Quantifying the cost of inaction

The financial consequences of inaction are equally stark:

• Companies experience approximately 40-percent loss of annual profits per decade due to supply chain disruptions. (1)
• Natural hazards account for nearly 30 percent of annual production downtime, potentially eliminating an entire year's earnings in vulnerable sectors. (3)
• In a 2024 Bain survey, 41 percent of operations executives surveyed ranked increased resilience second only to reducing cost. (2)

A resilience strategy should not be calculated in growth premiums alone but looked at as risk-adjusted returns. Companies that implement resilience strategies are:

1. Avoiding the downside tail risk (the 40-percent profit loss from disruptions) (1)
2. Capturing optionality (better positioned when disruptions inevitably occur)
3. Gaining market share (from competitors caught unprepared)
4. Reducing volatility in earnings (which the market rewards with higher valuations)

A data-driven risk-assessment framework

To help businesses navigate these external pressures and develop a business strategy for resilience, Siemens developed the Digital Business Optimizer (DBO™), a free, comprehensive tool that allows organizations to digitally customize a business strategy for their facilities.

The DBO leverages data from multiple trusted sources, including the Environmental Protection Agency (EPA), the United States Department of Energy (U.S. DOE), Federal Emergency Management Agency (FEMA), and the National Renewable Energy Laboratory (NREL) to provide businesses with:

• An accurate assessment of their natural-hazard risks and current carbon footprint
• Customized scenarios and recommendations based on specific goals and needs
• Detailed return on investment projections for implementing innovative technologies, such as a combination of generation and storage technologies from solar panels to combined heat and power (CHP) to thermal-energy storage and battery storage

With minimal inputs—just a building’s address, type, and size—the DBO tool can generate a natural-hazard risk assessment and baseline carbon footprint, recommend optimal technology combinations to meet targets while minimizing costs, and support data-driven decisions based on comprehensive analysis rather than guesswork.

Similarly to identifying a proactive natural-hazard strategy, cybersecurity is just as critical. The DBO will soon include an assessment, which is now under development, that helps companies safeguard data and remain resilient in the face of today’s many challenges.

Ultimately, the question for boards and risk committees is no longer whether developing a resilience strategy is optional, but whether organizations can afford the financial and operational consequences of neglecting these material risks.

Sources

(1) McKinsey, “The triple play: Growth, profit, and sustainability” (August 2023)

(2) Bain & Company, “The CEO Playbook for Climate Resilience” (September 2025)

(3) McKinsey, “Risk, resilience, and rebalancing in global value chains” (August 2020)

Published: February 4, 2026