Losses from extreme weather are no longer confined to isolated assets or sectors but increasingly emerge through shared systems - including infrastructure, supply chains, insurance markets and public services - on which all economic actors depend, according to a new report produced by Carbon Disclosure Project.
Extreme weather could cost the global economy almost $900bn in future losses, with risks set to escalate sharply, according to the new report. The 11-page report, “Disconnected Defenses: Extreme Weather Risk Across Corporates, Cities and Financial Systems”, published in May 2026 draws on the disclosure data from over 22,100 companies from more than 1,000 cities, states and regions across 80 countries.
The report’s central argument is that extreme weather is a systemic risk requiring coordinated action across actors, not simply a firm-level hazard to be managed through site-level adaptation.
The findings reveal that while 11,261 companies disclosed full environmental data in 2025, just 35% identified extreme weather as a material financial risk. Despite this, the firms disclosed that extreme weather had caused nearly $3bn in real losses in 2025 alone, primarily through increased direct costs of $309m and operational shutdowns worth $266m. Heavy rain was the largest single driver, accounting for $1.5bn of losses.
Companies anticipated $898bn in future financial impacts, principally due to flooding (expected to cost $528bn), cyclones ($161bn) and heavy rain ($86bn). Almost half of firms (48%) expected extreme weather risks to materialise in the next two years.
Financial losses are projected to be driven by reduced production capacity (accounting for $326bn of losses) and asset impairment or early retirement ($218bn). They are not anticipated to be confined to isolated assets or sectors, but to be spread across systems on which businesses depend, such as infrastructure, supply chains, insurance markets and public services.
The cost of mitigating risks is much lower than the cost of the risks themselves, the disclosure platform noted: the median cost of risks per company stands at $39.4m, while the cost of mitigating them is $3.1m – nearly 13 times lower.