Disconnected defenses: extreme weather risk across corporates, cities and financial systems

The report examines how extreme weather risks are being identified, quantified and managed across three interconnected actors — companies, subnational governments and financial institutions. Drawing on disclosure data from over 22,100 companies and more than 1,000 cities, states and regions across 80 countries, the report argues that losses from extreme weather are no longer confined to isolated assets or sectors but increasingly emerge through shared systems — including infrastructure, supply chains, insurance markets and public services — on which all economic actors depend. Its central argument is that extreme weather is a systemic risk requiring coordinated action across actors, not simply a firm-level hazard to be managed through site-level adaptation.

The findings show that despite US$2 trillion in global losses from climate-related extreme weather over the past decade, only 35% of companies disclosing to CDP identify extreme weather as a financially material risk, pointing to significant underreporting. Nevertheless, those companies that do disclose report US$2.9 billion in losses in a single reporting year — led by heavy precipitation at US$1.5 billion — and project US$898 billion in future losses, with flooding alone accounting for US$528 billion and lost revenue from reduced production capacity representing the single largest financial risk effect at US$326 billion. Meanwhile, 62% of subnational governments already report being significantly impacted by extreme weather, yet nearly half face budget constraints limiting adaptation, with an identified adaptation investment gap of at least US$34 billion. A critical and largely overlooked risk is insurability: companies anticipate US$218 billion in asset impairment but fewer than 17 quantify the risk of reduced insurance availability, even as 149 disclosing insurers project US$49 billion in future climate-related claims liabilities — a stark mismatch suggesting that premium increases, coverage restrictions and insurer withdrawal from high-risk areas could hit companies far harder and faster than current corporate disclosures imply.