Double Trouble: Exposing the Risks of Hurricanes Helene and Milton

In the span of two weeks in late September and early October, hurricanes Helene and Milton hit the southeastern U.S., with the impact of each storm likely to eclipse USD 50 billion in direct losses.¹ The damage caused largely resulted from the physical hazards that the assets in the track of each storm are most exposed to. For investors, knowing where a portfolio company’s assets are physically located is therefore key to understanding the potential incurred costs from high-impact events.

Hazards that present the greatest risk to locations can vary considerably geographically. We find that, of asset locations in the southeastern U.S. in the MSCI GeoSpatial Asset Intelligence database, 7.2% and 3.6% have the highest exposure among all hazards to pluvial and coastal flooding, respectively, as detailed in the map.² Many locations with high pluvial-flood risk are in Appalachia, an area impacted by inland flooding from Helene, while over a third of locations with high coastal-flood risk are along the west coast of Florida, an area that experienced coastal flooding during Milton. While Florida has been particularly vulnerable to the impacts of tropical cyclones in the past, areas such as Asheville, North Carolina have been described as a “climate haven.”³ However, while climate havens may have a relatively small risk of extreme-weather events, it is never zero.

Floods are one of the costliest natural hazards today and the cost is projected to grow as more intense events become more common. As the frequency of pluvial-flood events is expected to increase, the cost of damage from a 200-year event today will be similar to that of a 100-year event in 2100, as the bar chart depicts. Manufacturing, industrial and warehouse assets have the highest costs related to asset damage from pluvial floods, highlighting the additional expected costs from business interruption and downstream supply-chain disruptions.