Extreme weather events are becoming more frequent and intense, creating an increasingly complex challenge for businesses in Canada. From torrential rains to wildfires, snowstorms, and heatwaves, no industry is immune to the significant risks posed by these natural events. The toll on businesses can be staggering, yet many organizations tend to remain underprepared.
The impacts of extreme weather events
The threat of extreme weather to Canadian businesses has reached unprecedented levels. In 2024, insured damage from severe weather events in Canada totaled an all-time high of $8.5 billion, breaking previous records. This figure is nearly three times higher than the losses recorded the previous year, representing a huge impact on Canadians across the country.
Some notable extreme weather events were the August hailstorm in Calgary, which alone resulted in $2.8 billion of insured damage in just over an hour, and the Jasper wildfire, with damages exceeding $1.2 billion. Widespread flooding in the Greater Toronto Area also added $940 million more, while storms and heatwaves across the country continually strained business operations and infrastructure.
The impact on businesses has been extensive and can affect them in a variety of ways:
Property damage
Physical assets such as buildings, vehicles, and equipment are increasingly at risk. In 2024, severe hail, wildfire, and flooding destroyed or severely damaged thousands of commercial properties, resulting in repair and replacement costs for business owners.
Business interruption
With more than a quarter of a million insurance claims filed in 2024 due to severe weather events, many businesses experienced forced closures, suspended operations, or significant slowdowns—especially in industries like transportation, hospitality, and manufacturing.
Supply chain disruptions
Flooded transport corridors and wildfire-impacted regions can delay shipments and interrupt critical supply chains nationwide. Canadian businesses reliant on just-in-time delivery systems can be particularly vulnerable, as logistical bottlenecks and supplier delays became more frequent and difficult to predict.
Reputational risks
Operational delays and prolonged service interruptions caused by severe weather can impact an organization’s reputation. Businesses unable to quickly restore operations or fulfill commitments in response to disasters can risk long-term damage to their customer and community relationships.
Risk mitigation for extreme weather events
The financial and operational risks from extreme weather are growing rapidly, and Canadian businesses should prioritize risk mitigation and preparedness like never before.
While extreme weather cannot be prevented, proactive steps can significantly reduce its impact on business operations.
Invest in infrastructure
Assess the durability of your property and invest in infrastructure upgrades designed to withstand severe weather. It’s important to consider measures such as:
- Installing flood barriers in at-risk zones
- Reinforcing roofs to withstand heavy snowfall
- Improving drainage systems to prevent waterlogging and flooding
Conduct regular maintenance checks to ensure your infrastructure remains in good condition, especially as seasons change.
Develop a comprehensive emergency plan
Every organization should have an actionable emergency response plan tailored to likely weather risks. Ensure your plan includes:
- Evacuation procedures
- Communication protocols for informing employees and stakeholders
- Allocation of resources for emergency use
Regular training exercises can ensure your staff is prepared to execute these plans effectively in real-life scenarios.
Diversify supply chains
Relying on suppliers in weather-sensitive regions could put your business in jeopardy. Diversifying suppliers across different geographical areas can help reduce the risk of supply chain disruptions during extreme weather events.
Leverage technology for weather monitoring
Real-time weather forecasting tools and climate risk analytics can help businesses stay a step ahead. Monitoring weather conditions allows companies to anticipate disruptions and implement contingency measures before conditions worsen.
Create a financial safety net
Consider setting aside an emergency fund to cushion against unexpected costs arising from extreme weather. This fund can also serve as a bridge while filing insurance claims and waiting on reimbursements for insured losses.
Types of business insurance to consider for extreme weather events
Insurance can be a critical piece of the puzzle when it comes to safeguarding your business against extreme weather. An insurance policy tailored to your business can help mitigate financial risks, minimize downtime, and aid in recovery efforts.
Commercial property insurance
Commercial property insurance can help cover damage to buildings, inventory, and equipment caused by extreme weather. However, reviewing policy details is essential to understand exclusions, such as coverage for floods, which often require additional coverage.
Business interruption insurance
This type of insurance can help cover income lost during periods of operational downtime. It can help pay for ongoing expenses such as employee wages, rent, and loan repayments while a business rebuilds or repairs physical damage.
Commercial vehicle insurance
For businesses reliant on vehicles for operations, commercial vehicle insurance can prove invaluable. It can help insure against damage to company-owned vehicles caused by storms, flooding, or other uncontrollable events.
Review your business insurance coverage
Conduct a thorough review of your coverage annually and adjust policies as necessary. Working with an experienced insurance specialist can help tailor your coverage to your company’s specific needs, ensuring you are not exposed to unnecessary risks.
Ensure your business is protected in the event of extreme weather
Extreme weather is an unavoidable reality, and businesses across Canada must adapt to this new normal. By combining infrastructure upgrades, strategic planning, and tailored business insurance, organizations can help safeguard their operations. Doing so not only safeguards physical assets but can help ensure business continuity.
Take the first step towards safeguarding your business and learn more on our business insurance landing page.
