Risk and Financial Instruments
Towards Sustaining Global Value Chains
An increasingly complex and global system, supply chains have latent dependence on both resources and transportation. As a result, companies need to consider both source and demand regions where they operate. Environmental disasters and climate extremes including but not limited to floods, water shortages or droughts, earthquakes, and oil spills, can impact different sections of the supply chain at different localities often in a short period of time. The resultant risk is increased because (i) vulnerable areas are often the sole source of production materials and finding substitutes for those materials is limited, (ii) supply chains are affected by companies’ reliance on energy and transportation networks in vulnerable and congested coastal settings, and (iii) local losses impact the supply chain on a global scale.
The CWC’s research shows that naturally varying ocean conditions can create storm tracks that translate into flood potential or drought persistence depending on the region. This information can be used to develop flood or drought risk forecasts a season to a year ahead to improve regional risk estimates of climate extremes. A global structure analysis of these extremes can identify critical nodes in supply chains. CWC is currently developing and providing novel regional financial risk management products, such as:
- Novel Regional Financial Risk Management Products (e.g., Cat Bonds, Index Insurance)
- Maintenance/Pre-emptive mitigation efforts
- Sourcing Strategies and Contingencies
- Relief allocation /planning
- Reservoir Storage re-allocation and increased monitoring and response
- Indexing municipal water utility risk exposure
CWC research is working to make fundamental advances in our ability to comprehend the complexities of climate by using probabilistic cloud modeling to properly characterize precipitation and solar radiation.
The mineral extraction industry faces the dual challenge of increasing water management costs and growing public scrutiny of the often-irreversible effects of mining on local land and water resources.
Understanding the hydro-meteorological processes responsible for extreme flood events and the associated temporal and spatial characteristics of sequences for the associated precipitation events
The development of Pernambuco’s society and economy requires reducing its vulnerability to recurrent droughts or floods, and increasing the efficiency in the allocation of available water resources in the state.
CWC is developing and testing technologies and policies to help farmers in water-stressed hot spots conserve water, and is also working on an extensive, multi-year project to analyze and address India’s water crisis at a national scale.
To properly diagnose water risk, CWC researchers examined both existing demand and variations in renewable water supply at appropriate spatial resolution and unit.
- Flood Risks and Impacts: A case study of Thailand’s floods in 2011 and research questions for supply chain decision making M Haraguchi, U Lall | International Journal of Disaster Risk Reduction, 2014-09
- Megadroughts in North America: placing IPCC projections of hydroclimatic change in a long-term … E. R. Cook, R. Seager, R. R. Heim, Jr., R. S. Vose, C. Herweijer, and C. Woodhouse | Journal of Quaternary Science, 2009 [+]
- Amplification of the North American ‘Dust Bowl’ drought through human-induced land degradation Benjamin I. Cook, Ron L. Miller, and Richard Seager | Proceedings of the National Academy of Sciences [+]
- Assessment of trends in groundwater levels across the United States Tess Russo, Upmanu Lall, Hui Wen, Mary Williams, 2014-03-17
For additional relevant papers, click here. If you have any questions or would like to correspond with the Columbia Water Center on flood- or disaster-related research, please contact Katherine Alfredo.