Climate resilience: Why it matters for your business

Editor’s note: This narrative version of a recent Optimistic Outlook podcast episode, “From Risk to Readiness: How Climate Resilience Is Reshaping Business Decisions”—a conversation between Harry Morrison, partner in Sustainability and Responsibility at Bain & Company, and Erika Gupta, Global Head of Sustainability at Siemens Financial Services—reveals the six key factors of climate resilience:

• Why climate resilience is important for businesses today
• The two types of climate risk every business faces
• The three-part framework of climate resilience planning
• How to build climate resilience across operations
• How AI and data are changing climate risk assessment
• Climate resilience as competitive advantage

Climate change is increasingly showing up in places business leaders may not have expected—supply chains, insurance costs, plant efficiency and long-term investment decisions.

As extreme weather becomes more frequent and slow-moving environmental shifts reshape global markets, companies are realizing that climate change is no longer just an environmental concern. It’s a business risk that can affect operations, costs, and competitiveness.

Climate resilience refers to a company’s ability to anticipate, prepare for and adapt to climate-related risks while continuing to operate and grow. For organizations with global operations and complex supply chains, building resilience means understanding where vulnerabilities exist and putting strategies in place to reduce disruptions.

The urgency of climate resilience is growing—and shaping key business decisions.

“We’re seeing the losses globally from physical effects of climate change increasing about 5 to 7 percent a year in real terms,” said Harry Morrison*, partner in Sustainability and Responsibility at Bain & Company, on the Optimistic Outlook. “So this is becoming more and more of an issue whether you’re a property owner, asset owner, or a business with a complex supply chain.”

Yet despite growing awareness, only about one-third of businesses say they are prepared to adapt to these risks.

For companies that act early, however, resilience is not only about managing risk—it can also create opportunities to strengthen performance and gain a competitive edge.

Why is climate resilience important for businesses today?

Climate resilience has rapidly moved up the corporate agenda. In a recent survey of operations leaders, 41 percent ranked resilience as extremely important, second only to cost reduction as a business priority.

Yet adaptation spending still accounts for only a small share of total climate investment.

Part of the challenge is psychological. Many organizations view climate risk as something that will emerge years down the road rather than something affecting operations today.

Insurance can also create a false sense of security. Businesses often assume coverage will absorb potential losses—until premiums rise or coverage becomes more limited in high-risk areas.

Another barrier is internal ownership. Climate resilience often sits at the intersection of several departments, including risk management, supply chain, sustainability and finance. Climate risk is one of those topics that can get passed around among different leaders. Without clear accountability, initiatives can stall.

Different industries are also at different stages of maturity in addressing climate resilience, largely due to their degree of historic exposure to risks. Insurance companies and banks have long modeled climate risks in their portfolios. Real estate and infrastructure investors are rapidly increasing their focus on resilience. Meanwhile, many manufacturing companies and supply chains are just beginning to evaluate their exposure.

The two types of climate risk every business faces

When people think about climate risk, they often picture major disasters—hurricanes, floods or wildfires. These acute risks can cause direct damage to assets and interrupt operations.

Acute risks typically include:

• Floods, storms, and wildfires damaging facilities
• Extreme weather interrupting operations
• Rising insurance costs for high-risk assets

But many companies are discovering that chronic climate risks can be just as significant. Chronic risks tend to develop gradually but can reshape business economics over time. Examples include:

• Extreme heat that reduces manufacturing efficiency
• Water stresses that increase operating costs
• Declining crop yields driving commodity price spikes
• Transportation disruptions due to changing water levels or infrastructure constraints
• Workforce health impacts linked to extreme temperatures

Because such chronic risks accumulate slowly, they are often harder to identify early. It can impact how businesses operate, particularly in how well they're achieving profitability targets.

“With those acute weather events, we're seeing the cost of insurance go up,” said Erika Gupta, Global Head of Sustainability at Siemens Financial Services. “The slower, chronic effects of climate change can erode profitability.”

What Is climate resilience planning? A three-part framework

Organizations that are taking climate resilience seriously usually start with three fundamental steps: visibility, solutions, and governance.

Visibility Companies first need a clear picture of their climate-risk exposure. That means mapping where assets, facilities, and suppliers intersect with climate hazards such as flooding, heat, or drought. An enormous array of data and analytics is now becoming available in the effort to gain climate-risk visibility.

Clarity on solutions Once risks are seen and understood, organizations can then identify potential mitigation strategies. These may include changes in operations, infrastructure investments, or supply chain adjustments—organization must look upstream and downstream for potential mitigations.

Governance and ownership Lastly, resilience initiatives require clear leadership. Without defined accountability, responsibility can shift between departments, slowing decision-making and investment. Should climate-risk accountability reside with the chief sustainability officer, or the chief financial officer? Whatever the answer, ownership must be clearly defined.

Together, these three steps help transform climate resilience from an abstract concept into an actionable strategy.

How to build climate resilience across your operations

Fortunately, companies have a range of approaches and tools available to strengthen resilience across their operations and supply chains.

One common strategy is hardening physical assets, such as improving flood protection or reinforcing infrastructure against extreme weather.

Another approach is building operational flexibility. This can include diversifying suppliers across regions, developing alternative logistics routes, or designing products that allow for substitute materials if shortages occur. The goal is maximum optionality.

Collaboration across the supply chain is also increasingly important, because when climate-related problems arise, the companies involved already know how to deal with it mutually. For example, companies in agriculture may work with farmers to invest in crop varieties that are more drought- or heat-resistant.

Ultimately, resilience planning involves tradeoffs between risk reduction and efficiency.

“We all want resilience,” Morrison said in the podcast discussion with Gupta, “but the real question becomes: how much resilience can you afford? What’s the right level of buffer or redundancy in your value chain?”

How AI and data are changing climate risk assessment

New data and analytics tools are dramatically improving how companies evaluate climate risks.

Advanced modeling now combines climate projections with geospatial information—such as elevation or proximity to water—to estimate risks at the property level.

Artificial intelligence is also enabling more accurate medium-term weather forecasting, predicting conditions one to three months in advance. This allows companies to make operational decisions in real time on a week-to-week basis, such as adjusting agricultural purchases or anticipating fluctuations in energy markets driven by hydroelectric output.

Meanwhile, supply chain mapping technologies are helping organizations identify where raw materials originate and then overlay climate-risk data onto those sourcing networks. This can help build optionality.

These innovations are giving businesses insights that they’ve never had before to understand vulnerabilities and respond proactively, before actual climate impacts.

Climate resilience as competitive advantage

While resilience is often framed as risk management, it can also translate into a powerful competitive advantage.

Companies that invest in resilience are more likely to maintain operations during disruptions, allowing them to continue serving customers when competitors cannot.

Even more compelling is the fact that the price of business disruption caused by climate risk can exceed the cost of physical damage, making preparation a key driver of long-term performance.

At the same time, resilience is emerging as a major investment theme. Technologies that strengthen infrastructure—such as flood protection, cooling systems, and building retrofits—are attracting growing interest as businesses prepare for a changing climate. This presents opportunities for investment and growth.

Siemens helps businesses get started with climate resilience

For many organizations, the biggest challenge is simply understanding the degree of their exposure to climate risk.

“That is one of the reasons we added a site resilience analysis to our Digital Business Optimizer tool,” Gupta said.

The Siemens Digital Business Optimizer (DBO) is a free platform that provides site-level climate resilience analysis for U.S.-based locations. The tool identifies major climate hazards affecting a facility and recommends potential adaptation measures.

“It will identify your top climate hazards and provide a list of adaptation measures that can help protect that site,” Gupta said.

By translating complex climate data into practical insights, tools like DBO can help organizations move from awareness to action—and begin building climate resilience for the future while developing the competitive advantages that come with it.

*Harry Morrison was a co-author of “The CEO Playbook for Climate Resistance” referenced in the Siemens USA Stories article, “The business case for resilience: A risk imperative.”

Published: March 30, 2026