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Navigating La Niña: Insights for organisations and risk professionals

La Niña could arrive in the coming months, bringing with it significant weather events and wide-ranging risk considerations for organisations.

29/05/2024 · 5 minute read

La Niña could arrive in the coming months, bringing with it significant weather events and wide-ranging risk considerations for organisations.  Risk managers, insurance professionals, and business leaders need to understand the nuances of this complex climate pattern to effectively navigate the associated risks and make informed strategic decisions.

Understanding La Niña

La Niña is a natural climate phenomenon that occurs in the Pacific Ocean, with local as well as global implications for people’s health and safety, property and infrastructure resilience, agricultural and energy production, and supply chain management. It is the counterpart to El Niño, characterised by cooler-than-normal sea surface temperatures in the central and eastern equatorial Pacific. While El Niño often receives more attention for the severity of its related weather events, the impacts of La Niña are equally important to consider.

La Niña is primarily caused by strong, eastward-moving trade winds that cause cold water to come to the surface in the Pacific Ocean, through a process known as upwelling. This disrupts normal ocean-atmosphere interactions, leading to the development of La Niña conditions.

La Niña events occur irregularly, with varying frequency and duration. They typically last for several months to a year, but can sometimes persist longer. Recent studies have shown an increase in multiyear La Niñas, indicating a changing climate pattern that demands closer attention.

Varying global and local impacts

During La Niña, certain regions experience distinct climatic effects. Parts of the Pacific Northwest and northern Rockies in the United States tend to receive above-average precipitation, while the southern United States and parts of South America may experience drier conditions. On the other side of the world, higher precipitation amounts may be experienced in Australia, Southeast Asia, and India, with drier than usual conditions affecting areas such as East Africa. Temperature patterns can also be influenced, with cooler temperatures often observed in northern areas.

La Niña can influence storm activity, particularly in the Atlantic Basin, creating increased risk of more frequent and intense tropical storms and hurricanes. The economic and social impacts on hurricane-prone areas — including the Gulf of Mexico and the Caribbean Sea — can be substantial, disrupting infrastructure, supply chains, and the safety of local communities.

Water resources can also be affected, with some areas experiencing droughts and others facing increased rainfall and heightened risk of flooding. Ecosystems may undergo changes, affecting biodiversity and natural habitats.

All these effects can be amplified by climate change and record-warm ocean temperatures. As global temperatures continue to rise, the increased heat can intensify the oceanic conditions that give rise to La Niñas. This introduces additional complexities for understanding and managing La Niña-related catastrophe risk.

How could La Niña influence the 2024 Atlantic hurricane season?

The expected shift from El Niño to La Niña, together with record Atlantic Ocean water temperatures, is concerning forecasters that have provided a sobering outlook for the summer and fall months.

The National Oceanic and Atmospheric Administration is forecasting an above-normal Atlantic hurricane season with up to 25 named storms, eight to 13 of which are expected to become hurricanes, with four to seven expected to reach Category 3 status or above. This outlook is in line with others from earlier in the season, putting this year’s forecast well above the 30-year average for both hurricanes and storms.

Considering the potential devastating impact of severe storms on people, properties, and infrastructure, it is critical for organisations with interests or critical partners in areas that could be in a storm’s path to take action to build resiliency.

Our Hurricane Resource Center provides helpful information, checklists, and other resources focused on how you can prepare to protect your people and your properties, address and report potential property damage and service interruptions, and recover following a storm.

Implications and recommendations for organisations and risk professionals

La Niña can have far-reaching consequences for various industries and sectors, including agriculture, energy, real estate, and transportation. Agricultural operations, for example, may need to adjust their practices to account for changing precipitation patterns. Energy and transportation sectors may face challenges related to water availability and infrastructure resilience.

Closely monitoring and staying informed about La Niña forecasts, evolving conditions, and events is crucial for risk management and disaster preparedness. So is leveraging climate models to assess potential impacts, as well as specialist climate, property risk, supply chain, and crisis management knowledge, in order to develop effective strategies to mitigate La Niña risks and enhance resilience. Regularly updated online information sources and artificial intelligence-driven tools can support such efforts.

Organisations and risk professionals also should consider the following risk mitigation actions:

  • Conduct thorough risk assessments to identify vulnerabilities in your operations and understand impacts, including potential physical damage or financial loss.
  • Build supply chain resilience by establishing relationships with multiple suppliers, sourcing from different regions, or maintaining adequate inventory.
  • Develop robust pre- and post-event disaster response and business continuity plans.
  • Enhance communication and collaboration with key stakeholders, including government agencies and local communities.
  • Invest in climate-resilient infrastructure and technologies.
  • Stay informed about the latest research and advancements in climate science and adapt strategies accordingly.
  • Evaluate and stress test insurance programs and claims processes so they are as responsive as possible should the worst happen. This could include exploring how innovative parametric solutions can fill potential gaps in coverage programs and recovery strategies.

By understanding the causes, climate and weather effects, and associated risks, organisations can better mitigate and manage the impacts of La Niña events. Proactive risk management, disaster preparedness, and resilience planning are essential to navigating the challenges posed by this complex climate phenomenon. Stay informed, monitor La Niña conditions, and take decisive actions to protect your organisation and your long-term sustainability and resilience.

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