Climate risk outpacing response as UK flood losses mount
UK businesses are facing escalating financial exposure from climate-related disruption, with flooding emerging as one of the most immediate and costly risks to operations.
A growing number of extreme weather events – including storms such as Dudley, Eunice and Franklin – have already caused widespread damage across the UK, forcing site closures, disrupting supply chains and costing organisations millions in lost revenue and recovery. In 2022 for example, property damage was predicted to cost a hefty £500 million once all claims were paid out.
Yet despite the increasing frequency and severity of these events, much of the corporate response remains reactive.
Projections show that flood damage to UK non-residential properties could rise by up to 44% by 2100, while the wider economic cost of climate change is expected to reach at least 1% of GDP by 2045. For many businesses, this risk is no longer theoretical – it is already materialising on balance sheets.
At the same time, organisations continue to invest heavily in climate risk reporting, with estimates suggesting businesses are spending between £100,000 and £200,000 on compliance-led assessments. However, these outputs often fail to translate into practical, site-level action.
The result is a widening gap between insight and impact.
Risk teams are frequently left with complex, retrospective reports that describe exposure but do little to help prevent loss in real time. As climate volatility increases, this lag between awareness and action is becoming increasingly costly.
This challenge is already playing out across UK retail estates.
In 2022, Sainsbury’s identified flooding as a growing operational threat after a series of major storms disrupted sites across its network. Previous incidents had resulted in store closures, damaged stock and significant financial impact, underlining the limitations of a reactive approach.
During a period of severe weather linked to Storm Eunice, a store within the estate was identified as being at high risk of flooding. With limited official warning, the site faced the prospect of extensive damage, lost stock and prolonged closure.
However, using SmartResilience’s real-time monitoring platform, store teams received a site-specific alert 12 hours before the event, seven hours ahead of the Environment Agency warning. The alert identified the flood severity and triggered a pre-built operational plan: which stock to move, which access routes to close and when to deploy flood defences. This enabled staff to act quickly and minimise disruption ahead of impact.
What could have escalated into a major operational and financial loss was reduced to minimal disruption, with the store reopening quickly and avoiding an estimated £3 million in flood-related losses in that one site alone.
The case highlights a broader shift emerging across industry – from retrospective risk reporting towards forward-looking, operational resilience with a direct line to profit and loss.
SmartResilience combines live weather data, river levels and long-term climate modelling to provide early warnings of potential flooding. Rather than relying on broad regional forecasts, the platform delivers highly localised alerts, helping individual sites understand exactly what’s coming and when.
Founded by Harish Pesala, SmartResilience was developed to address the disconnect between data and decision-making. The platform brings together millions of live and historical data points to provide continuous visibility of risk at an individual asset level.
Harish Pesala said: “The reality is that climate risk is accelerating faster than most organisations’ ability to respond. Businesses don’t just need to understand their exposure – they need the foresight to act before an event happens.
“Too often, we see companies investing heavily in reporting that looks backwards, when the real financial impact is driven by what happens next.”
The financial implications are already significant. Alongside the £3 million avoided losses at Sainsbury’s, a FTSE 100 organisation has used the platform to identify and mitigate more than £70 million in climate-related risk over a ten-year period. Other businesses are applying similar approaches to strengthen supply chain resilience and maintain operational continuity.
For risk professionals operating in a tightening insurance market, the pressure is mounting. As climate exposure grows, premiums are rising and cover is becoming harder to secure – placing greater emphasis on demonstrable risk mitigation.
Keith Weed, Chair of Sainsbury’s CSR Committee, said of the package of climate resilience actions taken by the business: “This will help us create more resilient supply chains that can better withstand the shocks of climate change and the nature crisis. It will be key to our success in making good food accessible and affordable for all”*
As extreme weather becomes more frequent and more severe, the cost of inaction is rising.
For many businesses, the question is no longer whether climate risk will impact operations – but whether they are equipped to respond before it does.
*Source – Sainsbury’s Plan For Better Report 2024/2025
