Winter Storm Riley Threatens Pharmaceuticals and Airlines

March 2, 2018 – 427 ANALYSIS. As Winter Storm Riley threatens to flood the Boston area, we find pharmaceuticals and airlines industries are most exposed to flood risk.  Boston is a hub for both research and industry and the long-lasting financial consequences could be dramatic for some of the corporations with facilities in low-lying areas. 

Only two months after Winter Storm Grayson flooded Boston with its highest water level on record (4.88ft), Winter Storm Riley is now inundating the city and is predicted to bring water levels about 4.5ft above average high tide levels. The timing of Riley exacerbates this flood risk, as the storm surge is on top of already higher than average tides associated with the full moon.

Figure 1. Facilities in downtown Boston and Cambridge are particularly exposed to coastal flooding. Red represents the most exposed facilities while green shows the least exposed. Source: Four Twenty Seven

The greater Boston area is a hub for both research and industry and as this flooding is expected to worsen into the evening, the long-lasting financial consequences could be dramatic. Four Twenty Seven’s database of corporate facilities shows several industries and companies most exposed to coastal flooding. Our coastal flooding risk indicator measures exposure for low-lying facilities considering a combination of future sea level rise and storm surge from storms of varying intensity. A facility with high risk is likely to flood even during low intensity storms (e.g. 1 in 10 year events) and is also likely to experience a relatively large increase in storm surge.

Figure 2. Pharmaceutical facility exposure to coastal flooding in the greater Boston area. Red represents the most exposed facilities while green shows the least exposed. Source: Four Twenty Seven

Pharmaceutical companies are highly vulnerable to flooding in Boston, with medical research facilities and pharmaceutical preparation sites belonging to Eli Lilly and Pfizer showing the most risk. This industry exposure is particularly alarming given the thousands of lab animals (often kept in basements) and years’ worth of research that were lost by cancer and neuroscience research labs that were flooded during Hurricane Sandy. The recovery of these facilities required months and extensive funds, affecting this industry long after the storm.

Figure 3. Airline facility exposure to coastal flooding in the greater Boston area. Red represents the most exposed facilities while green shows the least exposed. Source: Four Twenty Seven

Airlines and other related airport services companies are also likely to be badly impacted by today’s storm. Storm damage of runways takes time and funds to repair, while impacting travelers and airlines in wide-reaching causal chains. While the location of Boston Logan International Airport makes it particularly vulnerable, the scheduling offices of airlines such as Delta and United are also largely exposed. Thus, in addition to costly delays and cancellations due to the local conditions, these airlines may experience more widespread scheduling difficulties if these buildings are inundated.

While understanding the long-term economic impacts of Winter Storm Riley will take many months, these findings highlight potential implications for the pharmaceutical and airline industries, their investors, and those who rely on their services.

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Four Twenty Seven’s ever-growing database now includes close to one million corporate sites and covers over 1800 publicly-traded companies. We offer subscription products and advisory services to access this unique dataset. Options include data feeds, an interactive analytics platform and company scorecards, as well as custom portfolio analysis and benchmarking.