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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.
Palm trees blowing in the wind and rain as a hurricane approaches a tropical island coastline

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 Ocean. 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 Niña events. This introduces additional complexities for understanding and managing La Niña-related catastrophe risk.

What impacts could La Niña have on Australia?

La Niña events typically result in the following impacts to Australia:

  • Increased Rainfall:  Above average winter-spring rainfall is commonly observed especially across the east and north of the country.  In La Niña years, the increased levels of rainfall continue into the summer months (December-March) in eastern Australia, with rainfall levels usually 20% higher than the long-term average.  The increased rainfall levels can result in severe flooding in the eastern parts of the country.  The east coast experiences twice as many severe floods during La Niña years than El Niño years. 
  • Cooler Temperatures and Shift in Temperature Extremes:  Cooler than average maximum temperatures across most of the Australian mainland south of the tropics.  This is more prevalent in the second half of the year and is due to increased cloud cover and rainfall.  However, in northern and eastern areas of the country, the cloud cover has the opposite effect as it acts as an insulator, resulting in warmer than average minimum temperatures. La Niña years are often associated with a decreased frequency of extreme daily high temperatures.  In the warmer half of the year, southern coastal locations such as Adelaide and Melbourne tend to experience fewer heat extremes but have an increased tendency to experience prolonged warm spells. 
  • Increased Tropical Cyclones:  Increased numbers of tropical cyclones in the Australian Region are associated with La Niña years.  On average, twice as many cyclones make landfall in La Niña years when compared to El Niño years.  Historical records show that the only years with multiple severe tropical cyclone landfalls in Queensland have been La Niña years.  This could mean an increased likelihood of major damage and flooding as a result of strong winds, high seas and heavy rains.
  • Earlier Monsoon Onset:  The tropical monsoon is generally two weeks earlier during La Niña years than during El Niño.  This means that above average rainfall occurs in the earlier part of the wet season in the northern tropics and tails off in the latter half of the season. 
  • Interaction with the Indian Ocean Diopole:  Some La Niña years, for example in 2010, occur at the same time as a negative Indian Ocean Diopole.  When this occurs, rainfall across large parts of Australia is above average, often producing intense rainfall and widespread flooding across the country.  

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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This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any modelling, analytics, or projections are subject to inherent uncertainty, and any analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. LCPA 24/339