El Niño Is Becoming a Global Business Risk

25 August 2026

Executive Summary

El Niño is strengthening rapidly and is increasingly likely to become one of the most significant global business-continuity risks of the coming months.

The World Meteorological Organization says a strong El Niño is developing and is expected to intensify through August–October 2026, affecting temperatures and rainfall patterns across much of the world. WMO stresses that regional effects vary and forecasts indicate probabilities rather than certainty.

NOAA’s latest assessment goes further: it now puts the probability of a very strong El Niño during the Northern Hemisphere autumn and winter above 90%.

For businesses, this is not simply a weather story.

El Niño can simultaneously affect:

• Agriculture.
• Food prices.
• River transport.
• Hydropower.
• Mining.
• Manufacturing.
• Fisheries.
• Insurance losses.
• Infrastructure.
• Water availability.

Reuters estimates that previous major El Niño episodes created trillions of dollars of cumulative global economic losses and warns that the developing event is exposing tropical commodities particularly sharply.

The risk lesson is therefore:

El Niño can create several different supply-chain problems at the same time, in different parts of the world.

UK Impact

The UK may not experience the most severe direct El Niño impacts, but British companies can be heavily exposed through overseas suppliers.

Potential vulnerabilities include:

• Coffee from Vietnam and Indonesia.
• Cocoa from West Africa.
• Sugar from India and Thailand.
• Agricultural commodities from Latin America.
• Minerals produced using hydropower.
• Goods transported on drought-sensitive rivers or canals.
• Suppliers dependent upon reliable water availability.

Reuters reports that India, once one of the world’s largest sugar exporters, may have little export surplus for several seasons as El Niño threatens rainfall while domestic ethanol demand also absorbs cane production.

The risk is therefore not necessarily visible from the UK supplier’s address.

It may sit several tiers upstream in the climate exposure of the raw material.

Global Impact

El Niño does not create the same weather everywhere.

WMO expects wetter-than-normal conditions in some regions and increased drought risk in others. A positive Indian Ocean Dipole may amplify impacts around the Indian Ocean basin.

Reuters identifies particular vulnerabilities including:

• Cocoa production in West Africa.
• Robusta coffee in Vietnam and Indonesia.
• Sugar production in India and Thailand.
• Fisheries along the Pacific coast of South America.
• River transport and hydropower.
• Food-price inflation in emerging economies.

This is why businesses should avoid treating El Niño as one single risk.

It is better understood as a global risk multiplier.

Our View

Businesses should begin mapping climate sensitivity across critical suppliers now, rather than waiting for individual shortages to appear.

Companies should ask:

• Which critical suppliers operate in El Niño-sensitive regions?
• Which raw materials depend heavily upon rainfall?
• Which producers depend upon hydropower?
• Are important transport routes vulnerable to drought or flooding?
• Could crops be affected simultaneously in several sourcing regions?
• How much safety stock exists?
• Can alternative origins be technically approved now?
• Are contracts exposed to commodity-price escalation?
• Could water restrictions interrupt manufacturing?
• Do insurance arrangements adequately address flood, drought and business interruption?
• Are seasonal forecasts incorporated into procurement decisions?
• Are several “alternative” suppliers exposed to the same weather system?

The important point is timing.

El Niño is increasingly foreseeable.

That means businesses have a window in which to act before the most serious consequences emerge.

The best response is not to predict exactly where every drought or flood will occur.

It is to identify which parts of the business would fail if the forecast becomes reality.

Risk Indicator: HIGH – GLOBAL / DEVELOPING

Disclaimer

The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.

Invictus Risk Solutions LLP – Helping organisations stay ahead of emerging risks through informed insight and independent analysis.