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Workforce planning lags behind rising climate disasters

Natural disasters are causing more damage and increasing costs, but they aren't playing a major role in how employers approach workforce planning, such as remote work.

Patrick Thibodeau
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Published: 10 Jan 2025

Historic wildfires in Los Angeles are causing widespread destruction, but for many companies, these climate disasters remain distant, one-off events rather than an urgent wake-up call for changes in workforce planning.

"Unless these disasters become as consistently predictable as seasons, companies will treat them as one-time events," said David Lewis, national managing director at Gallagher, a business consulting firm with expertise in risk management.

Financial losses from natural disasters hit record levels last year, according to Munich Re, a large reinsurance company with U.S. headquarters in Princeton NJ. It reported that North America, including Canada, saw the greatest share of losses globally, $190 billion. Total global losses reached $320 billion last year, making it the fifth-most expensive year globally since 1980.

Climate change is the major contributor to the disasters, according to Munich Re.

"Hardly any other year has made the consequences of global warming so clear: with annual average temperatures reaching around 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels for the first time, 2024 will surpass the previous record from 2023," it reported. 

Some of the key elements of workforce planning include leave-of-absence policies, the role of geographic risks in hiring decisions and work-from-home (WFH) practices. 

Kate Lister, president of Global Workplace Analytics, said large companies are increasingly considering natural disasters in planning decisions, but there is also a disconnect. For instance, there is a push in Washington to get federal workers back into the office even though WFH an already established working-from-home infrastructure enabled federal workers during a recent snowstorm. 

"Organizations have very short memories around disasters," Lister said.

Researchers see evidence of benefits

However, researchers found that disasters, including heat shocks and periods of extreme temperatures, are beginning to affect some workforce planning efforts and influence corporate locations. Another new study reported that companies with WFH capabilities performed better in sales and net income when COVID-19 struck.

Compound natural disasters, where multiple disasters strike in a relatively short period, might also affect employers.

Dan Schawbel, managing partner at Workplace Intelligence, said the increasing frequency of disasters highlights the need for resilient workforce planning strategies. 

"This includes evaluating office locations for climate risks, incorporating remote work capabilities into continuity plans, and investing in sustainable infrastructure," Schawbel said. "The LA fires and the soaring costs of natural disasters could push climate considerations higher on corporate agendas."

Gallagher's Lewis said, while companies are learning from past experiences, there isn't yet a widespread trend of avoiding natural disaster-prone locations.

Lewis said that companies hiring workers in certain regions might consider the local natural disaster risk. 

"I think it's fair to at least privately consider whether it's in your best interest to bring those individuals on board," he said. However, he also added that employers are unlikely to discuss those decisions publicly. 

Patrick Thibodeau is an editor at large for TechTarget Editorial who covers HCM and ERP technologies. He's worked for more than two decades as an enterprise IT reporter.

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