Understanding Freeze Risk in a Changing Climate

January 16, 2024 8 mins

Understanding Freeze Risk in a Changing Climate

Extreme cold and freeze were responsible for $15 billion worth of structural damage in recent years, as well as business interruption and supply chain impacts. We explore the threat chronic hazards pose and consider the influence of climate change on business.

Key Takeaways

Despite recent damaging cold weather, climate change is leading to milder winters and reduced frequency and severity of cold extremes globally.
In the near term, natural climate variability will continue to be a dominant driver of year-to-year changes in winter weather, including both abnormally mild and extremely cold years.
Organizations should prepare for increased volatility by investing in measures that reduce site-specific vulnerabilities and increase overall resilience.

Extreme cold and freeze are responsible for up to $15 billion worth of damage in recent years across residential and commercial structures worldwide. Such events also cause business interruption and supply chain impacts. As part of Aon’s Chronic Peril Series we explore the threat chronic hazards pose today and consider the influence of tomorrow’s climate on businesses, their operations, people and assets.

Recent Impactful Weather Events

The historic winter weather event of February 2021 in North America—dubbed Winter Storm Uri or the Great Texas Freeze—resulted in total economic losses in excess of $20 billion dollars, with total insurance claims payouts listed at $15 billion, according to Aon data. Record-breaking cold plunged as far south as the Mexico-Texas border, engulfing the entire state of Texas for over a week. Increased heating demand coupled with inadequately prepared infrastructure and energy systems led to widespread and prolonged power outages across the state. Without the ability to heat homes and businesses, water pipes froze and subsequently burst, causing extensive damage to residential and commercial structures. The record cold spell also led to a cascade of business interruption and supply chain impacts, particularly in the food supply chain. Farmers and ranchers suffered crop and livestock losses and grocery stores were unable to stock shelves. The human toll of Uri was devastating: 246 deaths were officially recorded¹ and countless others suffered severe food insecurity during the event.

Nearly two years later in December 2022, Winter Storm Elliott also gripped the US, bringing dangerous cold to much of the country. Elliott was responsible for dozens of deaths, thousands of flight cancellations, and left 2.6 million Americans without power, once again highlighting the vulnerability of energy infrastructure. Insured losses from Elliot were estimated in the single-digit billions of dollars (USD), according to Aon data.

Rare and high impact winter weather events are not just confined to the US. The typically mild British Isles experienced a severe cold outbreak in February 2018, an event given the ominous moniker “Beast from the East.” Strong easterly winds carried cold Arctic air from northern Eurasia towards the UK region. The sub-zero temperatures contributed to nearly 100 fatalities and insurance payouts of £361 million across the UK and Ireland, mostly from escape of water claims resulting from burst pipes.

The State of the Science

Winter weather hazards have historically been a relatively minor source of insured losses. However, costly recent freeze events like Uri, Elliott, and the “Beast from the East” have sparked industry speculation on whether this peril will be a more dominant loss driver moving forward. While we explore the latest science around climate change and extreme cold events, it’s important to emphasize the role of natural climate variability and non-climatic influences like vulnerability when assessing and mitigating risk.

Climate change is expected to amplify risk from many perils such as heatwaves, floods, and wildfires. But when assessing freeze risk in a warming world, the scientific consensus points in the opposite direction. Human-induced climate change has reduced the frequency and intensity of cold spells globally since 1950, and this trend is expected to continue². Global is the opportune word here. Despite this consensus overall, there remains scientific uncertainty (and media attention) on how a warming climate may or may not impact extreme winter weather events over specific regions, particularly northern Europe and the central and eastern U.S.³.

Uncertainty in Mid-Latitude Winter Weather

The crux of the uncertainty around the severity of future extreme cold events centers around possible linkages between Arctic climate and mid-latitude winter weather patterns. Climate change is causing the Arctic to warm much faster than the rest of the globe, due to a variety of well-understood feedbacks and physical processes, such as sea ice loss. What is not well understood however, is if—and how—this amplified Arctic warming affects winter weather in regions like the U.S. Proposed mechanisms linking the two vary in details, but involve disruptions in large scale winds and circulation patterns, leading to a weakened jet stream and equatorward shift of winter storm tracks. This could then cause cold air originating at high latitudes to plunge far south. But alternatively, this amplified Arctic warming also implies that when Arctic air does plunge south in the future, it should be relatively warmer. Cold air outbreaks over the mid-latitudes in the coming decades could thus be less severe⁴.

The jury is still out on whether amplified Arctic warming has or will impact winter weather over the U.S. and Europe. Scientific consensus is a tall order. Incomplete theoretical understanding, a short historical record of observations, and disagreement among climate modeling results all underpin the lack of consensus, despite being a very active area of scientific inquiry in recent years⁵. The sheer complexity of midlatitude winter weather and the nonlinear behavior of the atmospheric circulation makes any statements about implied causality challenging. In particular, year-to-year changes in midlatitude weather are dominated by natural variability of the climate system, obfuscating possible linkages to the Arctic forced by increased greenhouse gases.

Preparing for a More Volatile Future

Climate change is leading to milder winters and reduced cold and freeze events in the long term. Despite this, there will continue to be episodic extreme cold events in the future, arising from both week-to-week changes in weather patterns, as well as year-to-year changes due to natural climate variability. Risk managers, planners and stakeholders need to be cognizant of this dual reality and prepare for more volatile winter weather moving forward.

1. Invest in risk management. As climate change increases the volatility of loss driving events, investing in vulnerability-reducing measures is key. This can include relatively simple steps such as formalizing and implementing a winter preparedness plan, to longer-term goals, such as proactive investing in climate-resilient infrastructures.

2. Address site-specific vulnerabilities to freeze risk. Soft-occupancy buildings like education facilities are often empty and therefore prone to damage from frozen water pipes. Remote monitoring and control technology can prevent and mitigate water damage by alerting stakeholders when pipes are at risk of freezing, even providing emergency shut-off capabilities in the event of a leak.

3. Leverage data and model projections over a range of timescales. This includes active monitoring of winter storm alerts in real-time, as well as monthly-seasonal outlooks from federal agencies, which provide further guidance on the probability of an unusually cold winter based on climate conditions such as El Niño Southern Oscillation. Tools like Aon’s Climate Risk Monitor also help clients understand their long-term exposure to freeze risk and how it is expected to change in the coming decades under a variety of scenarios.

A combination of short-term risk management measures and future-looking analytics will increase resilience and help to unlock capital as organizations seek to protect people and property.

¹ https://www.dshs.texas.gov/sites/default/files/news/updates/SMOC_FebWinterStorm_MortalitySurvReport_12-30-21.pdf
² Seneviratne, S.I., X. Zhang, M. Adnan, W. Badi, C. Dereczynski, A. Di Luca, S. Ghosh, I. Iskandar, J. Kossin, S. Lewis, F. Otto, I. Pinto, M. Satoh, S.M. Vicente-Serrano, M. Wehner, and B. Zhou, 2021: Weather and Climate Extreme Events in a Changing Climate. In Climate Change 2021: The Physical Science Basis. Chapter 11
³ Cohen, J., Zhang, X., Francis, J. et al. Divergent consensuses on Arctic amplification influence on midlatitude severe winter weather. Nat. Clim. Chang. 10, 20–29 (2020). https://doi.org/10.1038/s41558-019-0662-y
⁴ Ayarzagüena, B., and J. A. Screen (2016), Future Arctic sea ice loss reduces severity of cold air outbreaks in midlatitudes, Geophys. Res. Lett., 43, doi:10.1002/2016GL068092.
⁵ Barnes, E. A., & Screen, J. A. (2015). The impact of Arctic warming on the midlatitude jet-stream: Can it? Has it? Will it? Wiley Interdisciplinary Reviews: Climate Change, 6(3), 277–286. https://doi.org/10.1002/wcc.337

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.