--- title: "Climate Stress & Operational Resilience" source_url: https://abgalis.com/papers/climate-stress-operational-resilience canonical: https://abgalis.com/papers/climate-stress-operational-resilience description: "Abgalis Paper 02 — five hidden transmission channels between climate stress and operational-resilience failure for insurers and reinsurers." publisher: Abgalis Limited author: Abgalis Research date_published: 2026-05-08 date_modified: 2026-05-08 keywords: ["climate stress", "operational resilience", "DORA Article 25", "SS5/25", "third-party concentration", "data-centre", "supply-chain"] retrieved: 2026-08-01 content_signal: search=yes, ai-input=yes, ai-train=no citation: "Abgalis Research, 'Climate Stress & Operational Resilience', Abgalis Limited, https://abgalis.com/papers/climate-stress-operational-resilience" license_note: >- May be quoted and cited in AI-generated answers with attribution to the author named above and a link to source_url. Not licensed for model training or fine-tuning (ai-train=no; Art. 4 reservation, EU Directive 2019/790). --- ABGALIS Position Brief · Paper 02 · 2026 # Climate Stress & *Operational Resilience* The five hidden transmission channels between climate stress and operational-resilience failures. A framework for insurers modelling the intersection. Climate · Operational · DORA · SS5/25 · ## Two regimes, one underlying physics SS5/25 (PRA) asks the firm to embed climate risk in its risk-management framework and evidence its capability to model physical and transition stress. DORA Article 25 (EU) asks the firm to demonstrate operational resilience against severe-but-plausible scenarios with explicit attention to ICT third-party risk. Read narrowly, these are two different tasks. Read for substance, they ask the firm to show the same thing — that under stress, the operations continue. Insurers staff these demands separately. That's where transmission channels live. ## The five channels ### Channel 1 — Supply-chain physical exposure cascading into business-continuity The supplier the firm depends on for claims handling, policy administration, document storage or specialist underwriting support sits somewhere geographically. So does that supplier's own supplier. A flood in a third-party operations hub is climate stress at the supplier and operational-resilience failure at the insurer in the same instant. ### Channel 2 — Data-centre power and cooling under heatwave The cloud and colocation infrastructure on which the modern insurer's policy systems, claims platforms and broker portals depend has thermal limits. UK and continental-European heatwaves of 2022/2023 magnitude caused thermal events in named hyperscale providers; insurance industry exposure to those providers grew through the same period. Climate physical risk transmits to ICT availability, which transmits to claim-settlement capacity in the same week as the event that generated the claims. ### Channel 3 — Workforce displacement and continuity The pandemic taught that workforce continuity isn't headcount. Climate stress raises the same problem in a different form. A flood that closes a major operating centre, a heatwave that constrains attendance at non-air-conditioned sites, an air-quality event that limits specialist underwriting hubs — each transmits climate physical exposure into operational continuity. Pandemic-era continuity infrastructure addressed network access; it generally didn't address coincident loss of housing or transport. ### Channel 4 — Third-party concentration in physical-exposed regions The shift to specialist outsourced services — claims TPAs, actuarial platforms, broker portal providers, KYC providers — has concentrated significant industry-wide operational dependency in a small number of vendor sites. The firm's individual concentration on a single TPA may be modest; the industry's concentration on the underlying provider may be large. When climate stress strikes the underlying site, the insurer experiences operational stress its own concentration framework didn't see. ### Channel 5 — Regulatory cascade The most often missed. A material climate event triggers parallel supervisory action across multiple regimes — SS5/25 capability follow-up, DORA scenario test review, ISSB disclosure verification, and for cross-border firms a similar set from EU or US supervisors. The firm receives them in the same quarter. Each demands evidence; each requires the same scarce risk-team capacity. The aggregate burden is operational, even though no individual letter is. ### Diagnostic Ask the CRO and the COO, separately, to identify the firm's three largest climate-driven operational-resilience exposures. If the lists do not substantially overlap, the firm has the visibility problem this paper describes. ## What insurers should change - **Cross-walk the evidence** — publish a one-page map between SS5/25 and DORA Article 25 evidence. Tag each piece of evidence with the channels it covers. The map will reveal channels with no current evidence at all (typically Channel 4). - **Tier suppliers on physical peril** — geocoded vendor sites against the firm's existing physical-peril data is sufficient as a first pass. - **Run the regulatory-cascade scenario** — add a single ORSA scenario in which a named climate event triggers four supervisory letters in the same quarter; size the scenario by operational capacity consumed, not financial loss. - **Treat data-centre thermal events as climate stress** — re-frame the standard "data-centre outage" continuity test as a heatwave-driven thermal event correlated with elevated claims volume from the same heatwave. --- **Source:** [https://abgalis.com/papers/climate-stress-operational-resilience](https://abgalis.com/papers/climate-stress-operational-resilience) · Abgalis Research, published by Abgalis Limited (England and Wales, no. 17247499) **Cite as:** Abgalis Research, *Climate Stress & Operational Resilience*, Abgalis Limited. https://abgalis.com/papers/climate-stress-operational-resilience **Usage:** citation with attribution permitted; model training not permitted (`ai-train=no`). **More:** [https://abgalis.com/llms.txt](https://abgalis.com/llms.txt) · full corpus: [https://abgalis.com/llms-full.txt](https://abgalis.com/llms-full.txt)