A particularly dry and hot weather this summer has tested Europe’s resilience to
heatwaves, demonstrating the challenges that businesses face due to climate change
and the need for an enterprise risk management plan addressing such emerging risks.

Heatwaves have already become increasingly common in Europe in recent years
with temperatures exceeding the historic average more regularly.

Projections from the World Climate Research Programme suggest that temperatures
across European land areas will continue to increase throughout this century at a
higher rate than the global average. Land temperatures in Europe are projected to
increase further by 1.2 to 3.4°C under one scenario and by 4.1 to 8.5°C under another
scenario (by 2071-2100, compared to 1981–2010).

In July, the UK has broken a new temperature record with 40.3°C in Coningsby,
Lincolnshire, while 33 other locations went past the UK’s previous highest
temperature of 38.7°C, set in 2019.

The hot weather has caused train tracks to bend, airport runways to buckle,
roads to melt, and created a series of implications for businesses.

Employees’ health risk

Ever rising temperature records are producing new challenges from a health
and safety perspective for both indoors and outdoors works.

The UK’s Health and Safety Executive (HSE) noted that there is no law for maximum
working temperature in offices or similar environments, or when it’s too hot to work.
The ‘Workplace (Health, Safety and Welfare) Regulations 1992’ currently state that
“the temperature in workplaces must be reasonable.”

However, vulnerable groups of people such as those with pre-existing medical
conditions have a significantly elevated risk of medical emergencies or death
during extreme heat events. The duty of care on employers will be higher on
employers where they are aware of such conditions and this should be factored
into risk assessments.

While until recently air conditioning was not seen as a necessity in the UK, perceptions might change. Other options to address the heat indoors may include:

• providing fans

• ensuring that windows can be opened and there is adequate ventilation

• relaxing the formal dress code

• placing insulation around hot plant and pipes

• shading employees from direct sunlight with blinds or by using reflective film on windows to reduce the heating effects of the sun
  

For people working outdoors, options are more limited and extreme heat can create unworkable conditions, slowing down the delivery of services and potentially impacting the business’ financial performance. There is also an increasing potential risk that businesses
could face civil claims from breach of duty of care as temperatures continue to rise.

The HSE recommends employers to assess a few factors, including:

• Additional sources of heat a person is exposed to such as cookers, drying equipment, or even the sun

• ‘Air velocity’ or how well ventilated the environment is

• Humidity

• The clothing worn, which may be dictated by personal protective equipment the worker is
  required to wear, uniforms or dress codes

• The amount of physical labour required in the role

• The individual’s size, weight, age and general fitness level
  

Infrastructure

Extreme temperatures can deteriorate building materials and therefore impact on safety levels. Infrastructure in areas with historically mild climates
is usually unprepared for extreme heat.

Many train services had to be cancelled during the July heatwave in the UK and others operated at reduced speed to avoid any damage to the tracks and to prevent rails from buckling, more than doubling journey times for some passengers. The hottest railway
track reached a scorching 62°C.

Road traffic also faced disruptions due to melting roads and the risk of tyres bursting. Some local authorities sent out the gritters to put sand on roads to try to prevent the road surface from melting.

Air traffic was also affected as the hot weather damaged the tarmac causing flight cancellations.

Transport disruptions caused by extreme heat events can not only affect staffing but also impact the supply chain and distribution networks, interrupt production, create friction with clients, and raise costs and prices.

Drivers should check the car’s tyre pressure before setting off on a journey and when the tyre is cold, ensure that the car has enough fuel or electric charge to keep the air-conditioning running and drive earlier in the day to prevent engines from overheating.

Unusually hot weather can also push up demand for energy, putting additional stress on energy infrastructure, potentially leading to power outages.

In July London narrowly avoided a power blackout. Increased demand for energy across Europe, combined with a bottleneck in the grid, forced the UK’s National Grid Electricity System Operator (ESO) to buy electricity from Belgium at the highest price Britain has ever paid to keep power flowing. The risk of blackouts during heatwaves is considerable also because electricity generation may be reduced for example if nuclear power stations lack the necessary cooling effect from rivers or the sea or if water levels are too low
to generate hydropower.

Dry, hot conditions also make wildfires more likely, creating additional risk for staff as well as physical assets such as buildings and machinery.

Preparing for climate risks

As climate-related risks become more frequent and intense they need to be incorporated within a business’ organisational risk registers. Heat is just one of many emerging risks that businesses will face as the climate changes and therefore preparing corporations for heatwaves should be part of a wider analysis of a company’s climate risk exposure and resilience plan. This will need to include the business’ operations globally, identifying the
main risk exposures including internal and external supply chains, considering controls/treatments to mitigate impacts, improving resilience and realise opportunities.

Climate resilience is part of the wider enterprise risk management (ERM) strategy, which should consider short- and medium-term impacts, and assess how they may affect the business and its workforce, with specific action points. Clear and succinct business continuity/crisis management plans to prepare for adverse events is also necessary to show stakeholders that the company’s management is taking its duty of care for the business and its employees seriously. This capability will gain in importance as climate-related risk reporting moves up on stakeholders’ agenda and is supplemented by the Task Force on Climate-related Financial Disclosures (TCFD), which assesses the financial implications of
climate change and linkage with ERM frameworks.

For further information, please contact:

Mark Black, Team Leader – Risk Control Services

mark.black@lockton.com