2.2 Current state of business engagement in EWS The following insights emerge by analysing the survey of 20 businesses, reviewing relevant literature and conducting interviews. Insight 1: Most businesses engage with EWS primarily as users The role of businesses as users of weather, climate and water data has expanded significantly in recent years. A joint survey by the IBM Institute for Business Value and Oxford Economics, which included 1,000 executives across 13 industries in 15 countries, revealed that most executives view better weather insights as a key factor in reducing operating costs and ensuring business continuity.17 Nearly 50% of respondents recognized weather insights as a source of competitive advantage. In the US alone, 95% of businesses rely on weather information.18 However, while businesses increasingly understand the value of weather-related insights, they are not generally sophisticated users of this information. This means they elect to work with tailored third-party insights derived from weather data rather than directly with the weather data itself. The fact that many businesses use EWS data is consistent with several recent findings (including by the World Economic Forum19) that most businesses do not invest in minimizing their physical climate risk exposure. Weather data used to optimize routine operations (e.g. ship routing) is not seen as risk mitigation. Neither are risk assessments, which require weather data, or data used for developing or refining new products or services. The use of weather data seems to be aligned with these cases. Insight 2: Businesses have multifaceted relationships with NMHS Businesses that engage in EWS often develop diverse and bespoke relationships with NMHS. They sometimes function simultaneously as users, partners, vendors and innovators. This means they not only provide products and services to NMHS, but also rely on NMHS data to develop customer- facing solutions. Businesses often collaborate with NMHS by offering feedback, helping to refine the quality and utility of weather data, which improves both their commercial offerings and public sector services. Businesses often grow into these relationships, realizing that as vendors or innovators, they can work towards becoming partners and further harness the EWS value chain to drive innovation, capitalize on new market opportunities and position themselves as leaders in climate risk management. For instance, a weather information and service company exemplifies the multifaceted relationships businesses can have with NMHS. The company operates across the hydrometeorological value chain. As partners, they collaborate on projects such as installing high computing capabilities in EWS networks and integrating weather data in EWS. As vendors, the company supplies advanced weather monitoring equipment, station networks and software solutions. Insight 3: There are a growing number of “innovators”, as defined in section 2.1 The global weather industry is experiencing substantial growth. The integration of EWS data across industries is helping companies manage operational risks while creating opportunities for innovative services that improve resilience and reduce costs. As demand for these solutions grows, businesses across multiple sectors are increasingly using weather-related data to drive profitability and long-term sustainability. In the past 5 to 10 years, entirely new categories of products and services have been created by combining weather data with other data and sophisticated technology. Agriculture has been a particular focus – companies are providing sophisticated, real-time added value assessments of the impacts of weather, climate and water risks on agricultural production. In insurance, the understanding of natural disaster risk has become much more precise, enabling the development of novel products. This is particularly evident through the growth of “parametric” products, i.e. those that issue payouts after certain objective indicators are reached rather than after a loss-adjustment procedure.20 While agriculture and insurance may see the most innovation, the opportunity cuts across industries. One company has developed an offering to help communities improve their standing within the Federal Emergency Management Agency’s (FEMA) Community Rating System (CRS), a voluntary incentive programme that rewards communities for reducing flood risks.21 Another example refers to the advanced wildfire detection systems that are being used by forestry and electricity companies, among others.95% of businesses in the US rely on weather information. Catalysing Business Engagement in Early Warning Systems 11

Catalysing Business Engagement in Early Warning Systems 2025