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El Nino Is a Business Wake-Up Call

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Businesses will suffer along with people and places this year if the El Nino event predicted by most climate models hits with its expected wicked strength.

El Nino is a warming of Pacific Ocean waters that exacerbates storms globally and can cause floods, droughts, famines and even civil unrest. The pattern is predicted to develop over the next few months, and can last more than a year. It arises every three to seven years. This year's pattern is reported to be on par with the intense 1997 phenomenon.

Due to its intensity, El Nino threatens company supply chains, particularly in the food and beverage sector.

"Historically, El Niño events drive up the price of certain commodities," reports Maplecroft, a London-based, global risk analytics firm. The firm has devised an El Nino scenario-based map that provides dramatic insight to the pattern's devastating affects and highlights the world's most vulnerable areas -- areas that also happen to comprise the raw supply of commodities for businesses and many of our goods.

For example, El Niño typically causes dryer conditions in Indonesia, reducing hydroelectric power and limiting Nickel production. In India, El Niño conditions may already be contributing to a weak monsoon, with 90 percent of the country receiving deficient rainfall in June. As a result, the sowing of key crops, such as rice, corn, soybeans and cotton, has been delayed and the potential negative impact on crop yields could impede the newly elected government's efforts to limit inflation and revive economic growth.

Nickel, by the way, is a key component in stainless steel, which is used to make everything from your laptop to your fridge, never mind its key use for water infrastructure because of its anti-corrosive properties.

In any event, considering that nearly two-thirds of small businesses do not have any emergency preparedness plan in place, according to a survey by the Ad Council, and considering that the Standard and Poor's rating agency may begin downgrading publicly traded corporations that do not have a climate change plan in place (a la S&P's initiative with sovereign nations), this year's El Nino, if it does come to fruition as expected, will no doubt become a wake-up call for the business community.

The Obama administration's most recent climate change initiatives aimed at safeguarding electricity grids and improving plans for floods, coastal erosion, landslides, and droughts, among other measures, are prescient calls to action. They are not about climate change in the future, they are about the climate now.

Preparedness is crucial to climate survival -- not only for us, for businesses, too.

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