CWC scientists are creating risk management options by analyzing local and global impacts of climate extremes and environmental disasters.
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: