When storms hit markets, investors feel it

About this episode

Most acute physical risk tools overlay company sites on hazard maps to estimate direct damage. That needs asset location data most listed companies don’t disclose. It also misses losses that spread through supply chains. When Hurricane Harvey hit Houston in 2017, Ford and General Motors idled plants in other states because they couldn’t source plastics and chemicals.

This episode covers our market-based approach. We tracked how companies in 37 storm-sensitive US industries performed against the S&P 500 in the 26 weeks after 45 hurricanes, floods and wildfires, each causing at least $5 billion in damage between 2000 and 2024.

What you’ll hear

Most industries performed worse after major storms. Six showed a statistically significant link between storm size and weaker returns, led by homebuilding and electric utilities. At sector level, agriculture and real estate development showed the strongest effects.

For electric utilities, storm damage explained about 24% of the variation in excess returns over 26 weeks. Duke Energy underperformed the S&P 500 by 10% to 30% after the largest hurricanes.

Because the method draws on share prices, it covers companies that don’t publish where their assets are. Location-based models remain the right tool for site-level damage.

Read the full research

The white paper sets out the industry and sector results, with the electric utilities case study in full.

Read the white paper