Kathmandu. Damage from extreme weather hazards is no longer limited to personal property or areas. It is now increasingly spreading through shared systems, including all the infrastructure, supply chains, insurance markets, and public services that depend on it.
According to a new report from the Carbon Disclosure Project, extreme weather could cost the global economy nearly $900 billion in losses in the future, and the risk is set to increase exponentially. The 11-page report, “Disconnected Defense: Corporations, Extreme Weather Risk Across Corporates, Cities, and Financial Systems,” published in May 2026, draws on data from more than 22,100 companies in more than 1,000 cities, states and regions in 80 countries.
The report argues that extreme weather is a systemic risk. The report states that managing this through sector-level adaptation requires collaboration between governments, not just company-level risks. The results show that in 2025, 11,261 companies reported complete environmental data, but only 35% identified extreme weather as a major financial risk. Despite this, companies reported actual losses of about $3 billion due to extreme weather in 2025. This included a direct cost of $309 million and a shutdown of operations of $266 million. Heavy rains were the biggest factor. This resulted in a loss of $ 1.5 billion.
The companies had projected financial impacts of $898 billion in the future, mainly due to floods (estimated cost $528 billion), cyclones ($161 billion) and heavy rainfall ($86 billion). Nearly half of companies (48 percent) expect severe weather risks in the next two years.
The fiscal deficit is expected to be due to a decrease in production capacity ($326 billion deficit) and asset depreciation or early retirement ($218 billion). These are not expected to be limited to personal assets or territories. But businesses such as infrastructure, supply chains, insurance markets and public services will expand into systems they depend on.
The report states that the cost of risk mitigation is much less than the cost of risk. “The average cost of risk per company is $39.4 million,” the report said, “while the cost of mitigation is only $3.1 million.” That’s about 13 times less. —Agency
