El Niño is a Systemic Risk, not just a Weather Event

In January 1998, everyone tracking El Niño was watching California. Then freezing rain fell on the St. Lawrence Valley and northern New England for four straight days. Four million people lost power. Montreal and Ottawa shut down. Restoration took days for some, weeks for many, months for the worst hit. Economic losses totaled from $5 to $7 billion; roughly $1.6 billion was insured.

The National Weather Service attributes the storm's origins to that winter's strong El Niño pattern. It remains the only billion-dollar natural disaster to strike northern New York, Vermont, New Hampshire or Maine since 1980.

Recovery outlasted the event by a margin no one modeled. More than a fifth of Canada's syrup-producing maple taps were destroyed, and because a sugar maple takes roughly 40 years to reach tappable size, the region lost three decades of production capacity.

Four days of weather. Thirty years to come back.

The lesson isn't that ice storms are dangerous. It's that El Niño can reach you through whatever you aren't watching, and most businesses are still watching the wrong thing.

El Niño is a recurring climate pattern when warmer-than-normal Pacific Ocean waters shift weather systems worldwide, altering rainfall, temperatures, storm behaviors, and wildfire and drought risk. It is measured by the Oceanic Niño Index; readings at or above +0.5°C indicate El Niño conditions.

“Super El Niño” is an informal label for anomalies reaching roughly +2.0°C or more. Models put the 2026–27 peak near +3.6°C against a prior record of +2.75°C. This event isn't approaching the Super El Niño threshold; it is well past it. NOAA declared El Niño conditions in June and now puts the probability of a very strong event this winter above 90%. At that magnitude the pattern redistributes risk rather than simply intensifying it across geographies, across perils, and across the operational pathways that convert weather into financial loss.

“For a business, the question is not whether one headline event occurs,” says Chubb VP, Commercial Resilience Service Lead, Jason Ballentine. “It is whether several connected exposures begin building at the same time, in different parts of the business.”

Below-normal frequency is not below-normal loss. El Niño suppresses tropical cyclone frequency in the Atlantic while leaving severity intact; a single major landfall in a heavily exposed region can generate tens of billions in insured losses regardless of how many storms preceded it.

By mid-August 1992, following the 1991–92 El Niño, the Atlantic had produced no named storms at all. The season would end with seven, among the quietest counts on record.

The first one was Andrew. It reached Category 5 when it made landfall in Florida and became the costliest natural disaster in US history to that point — roughly $15.5 billion in insured losses against an industry expectation of $4 to $5 billion for a storm of that strength. Andrew is the reason catastrophe modeling became an industry discipline rather than a specialist tool.

When organizations recognize elevated climate risk, the instinct is capital expenditure: a multi-million-dollar flood wall, a roof upgraded for Category 5 winds.

Structural resilience matters. But businesses are far more likely to be disrupted by hidden, secondary exposures that low-cost operational change could have mitigated. The money gets invested in the wall while the loss comes through the supply chain.

The utility and cooling water blind spot. A manufacturer invests heavily in wind resistance at its primary plant but never examines the water and power dependencies around it. El Niño drought lowers reservoirs, triggering hydropower curtailment and cooling water restrictions. The plant is untouched and shuts down for a month anyway. The alternative costs a fraction of the capital spend: production shifted to off-peak hours, secondary power agreements, or high-water loads moved temporarily to a facility in another climate zone.

Logistics and transit bottleneck. A distributor raises the elevation of a distribution center to defeat flash flooding. The facility stays dry. Then El Niño-driven rains flood the access roads and rail lines for weeks, and inbound freight stops at the property line. The 1998 ice storm was this failure at regional scale: warehouses across the St. Lawrence corridor were undamaged and commercially dead, because the roads, rail and power feeding them were gone. The fix does not require construction; it requires you to map accumulation in your transit routes and pre-arrange alternative routing before the season peaks.

Your real exposure does not just include the sites you hold. It impacts the suppliers you buy from, the utilities feeding your operations particularly power and water, the transport corridors your goods move through, and the people reporting to work each day. It also reaches the inventory you bought months ago against an assumption about the weather.

According to NOAA, the 2015-16 Super El Niño produced the warmest winter on record across much of the US, and retailers across the Northeast took the loss through demand. Since cold-weather inventory carries six-to-nine-month lead times, retailers placed their orders in early 2015 after an unusually cold winter. By the time the warm winter was underway, the money was spent, the stock was already in the warehouse, and no physical event occurred anywhere in the Northeast.

Some losses hit immediately; others surface months later through supply chain disruption, structural degradation or raw material price shocks. By then the decisions that set your exposure are already made. Cost-effective resilience means assessing El Niño through operational dependency rather than hazard alone.

Chubb's Global Resilience and Risk Consulting team helps you move from climate insight to action.

We help you identify where your dependencies sit, where accumulation is building, and where intervention reduces loss before it materializes — moving you from reacting to weather events to managing the operational and portfolio dependencies that turn weather into financial loss.

Don't wait for the forecast to become a claim. Speak to our consulting team to quantify your exposure, prioritize your resilience initiatives, and get ahead of El Niño before it peaks this fall.

Want tools you can use today? Explore our free Extreme Heat Resource Hub and learn more about our Resilience Services to help protect your workforce and property against climate change.