Facing the furnace: how extreme heat is exacerbating corporate risk

June 2025 ranked among the hottest on record globally and in the U.S., with multiple local temperature records broken. Extreme heat is no longer an anomaly; it is now a structural risk, impacting health, infrastructure, and the financial resilience of businesses and communities alike. The Swiss Re Institute’s SONAR 2025 report confirms what many in the industry already recognize: extreme heat is intensifying, and the business implications are escalating. This is not simply about rising temperatures. It is about exposure, volatility, and the ability of our systems to adapt. For corporate risk managers, the conversation needs to shift from seasonal weather planning to long-term strategic risk management.

Property insurance has traditionally focused on perils like fire, storm, and flood. But heat, once considered marginal, is now a direct threat to physical assets.

High temperatures can compromise building materials, corrode infrastructure, and stress systems that were never designed to operate in extreme conditions. Pavement buckles, HVAC systems fail, and data centers overheat. The effects are especially pronounced in commercial and industrial real estate, where capital assets are highly exposed and the cost of operational downtime is significant. Business interruption is another growing concern. Power grid failures, transport disruptions, and supply chain breakdowns during heatwaves can lead to cascading losses that are not yet fully captured in traditional underwriting models.

This is where Swiss Re Corporate Solutions' Risk Data & Services (RDS) plays a critical role, providing detailed assessments of exposures to climate change at specific locations worldwide. With geospatial intelligence, satellite monitoring, and hyper-local climate projections, businesses can map vulnerability at the asset level and proactively structure their risk financing.

A national retail chain, for example, can use heat change risk analytics to decide where to invest in reflective roofing or battery-backed cooling systems. A municipality can reassess its insurance layers based on projected thermal stress to critical infrastructure over the next decades.

These are not hypothetical use cases. Swiss Re’s proprietary heat stress index is already helping clients quantify future claims volatility and recalibrate their risk appetites. It is giving decision-makers the tools to act before the heat hits.

The physical risks are clear, but the strategic impacts go deeper. Heat affects productivity, asset value, compliance, and even brand reputation. For real estate investors, it influences tenant retention and liquidity. For manufacturers, it leads to increased capital investment in mitigation technologies. And for boards, it presents a governance issue that will only grow in visibility.

This is why heat risk should no longer sit on the margins of enterprise risk planning. It belongs at the center of the conversation.

Extreme heat is a risk multiplier. It intensifies existing vulnerabilities and exposes new ones. For those of us helping businesses navigate this new reality, our role is evolving. It is no longer enough to respond. We must help clients anticipate and adapt.

At Swiss Re Corporate Solutions, we are integrating these insights into our risk advisory, underwriting, and product development. We are working with clients to prepare not just for today's exposures, but for the more volatile climate of tomorrow.