An interview with Fidelis Katima of Victoria Commercial Bank, an ESG and Sustainability Leader, on how El Niño affects Africa, conducted by IRM Africa. Read Part 1 here.
For parts of the Greater Horn of Africa, the Intergovernmental Authority on Development Climate Prediction and Applications Centre (ICPAC) has highlighted a high likelihood of below-normal rainfall in the remainder of 2026. The areas identified include South Sudan, Uganda, Ethiopia, Djibouti, much of Eritrea, Sudan, and western and coastal Kenya. This reinforces the need for organisations to use climate information for risk identification, preparedness planning, business continuity, operational resilience, and strategic decision-making.
Against this backdrop, IRM Africa speaks with Fidelis Katima of Victoria Commercial Bank, an ESG and Sustainability Leader with experience in climate risk, environmental and social governance, and sustainable finance, to share an Enterprise Risk Perspective on how El Niño affects Africa. The conversation explores what El Niño could mean for organisations, economies and sectors across the continent, particularly through its financial, operational and strategic implications, and how enterprise risk management can support preparedness, organisational resilience and better decision-making.
IRMA: El Niño is often viewed primarily as a weather phenomenon. From a risk management perspective, how should African organisations understand it as a broader strategic and enterprise risk?
FK: El Niño should be seen not just as a weather event, but as a systemic enterprise risk that can disrupt business operations, financial stability, and long-term strategy across Africa. Its impact can cascade through environmental, operational, financial, and socio-economic systems.
Strategically, El Niño creates both physical risks, such as floods, droughts, and heat stress, and secondary impacts, including supply chain disruption, commodity price volatility, infrastructure damage, and productivity losses. These effects are especially significant in climate-sensitive African sectors such as agriculture, energy, water, and informal markets.
From an ERM perspective, El Niño should be treated as a multi-dimensional risk driver affecting credit, market, operational, liquidity, reputational, and regulatory risks. For example, drought can weaken agricultural output and loan performance, while heavy rainfall can damage infrastructure and disrupt logistics.
It also creates systemic risks, where disruption in one area spreads across the economy. Reduced hydropower generation, food shortages, or infrastructure failure can quickly affect costs, stability, business continuity, and investment confidence. African organizations should therefore include El Niño in strategic risk registers, climate risk frameworks, scenario analysis, stress testing, credit appraisal, capital allocation, and business continuity planning. This shifts the response from reactive crisis management to forward-looking resilience planning, helping protect value and identify opportunities in resilient infrastructure, finance, and insurance.
IRMA: What are the most significant ways El Niño could affect organisations, economies, sectors, and communities across different regions of Africa?
FK: El Niño affects Africa unevenly, with impacts shaped by regional climate patterns, sector exposure, and community resilience. In East Africa, it can bring heavy rainfall, flooding, landslides, infrastructure damage, logistics disruption, and public health risks. Southern Africa often faces drought, reduced agricultural output, water shortages, and energy insecurity, especially where hydropower is important. West Africa may experience erratic rainfall, crop disruption, flooding, and urban infrastructure strain, while North Africa faces heightened heat stress, water scarcity, and pressure on food imports. The most exposed sectors include agriculture, energy, infrastructure, transport, finance, public health, and the workforce. Droughts and floods can reduce yields, disrupt supply chains, damage roads and ports, increase energy costs, raise credit and insurance risks, and affect labour availability and productivity.
At a wider level, El Niño can drive food inflation, slow GDP growth, strain public finances, disrupt trade, and increase livelihood insecurity, displacement, food and water stress, and social instability. These impacts are interconnected: agricultural losses can trigger loan defaults, food inflation, social unrest, and business disruption. For African organizations, the key is to treat El Niño as a multi-layered enterprise risk and embed it into risk identification, scenario analysis, resilience planning, and strategic, financial, and operational decision-making.
IRMA: Which sectors are likely to face the greatest exposure, and what factors make them particularly vulnerable to El Niño impacts?
FK: The sectors most exposed to El Niño in Africa are those that depend heavily on climate-sensitive resources, have limited adaptive capacity, or are closely linked to wider economic systems. The greatest risks often arise not only from direct physical impacts, but from how disruption spreads across value chains, financial portfolios, and communities.
- Agriculture and agribusiness are highly exposed because rainfall variability, drought, flooding, pests, and disease can disrupt planting, yields, food supply chains, agro-processing, and exports. Vulnerability is heightened by rain-fed farming, limited irrigation, and smallholder dependence.
- Energy systems, especially hydropower-dependent markets, face risks from reduced reservoir levels, power shortages, load shedding, and flood damage to infrastructure. Limited energy diversification and weak grid resilience increase business costs and reduce productivity.
- Financial services are exposed through loan books, insurance claims, and portfolio concentration in climate-sensitive sectors such as agriculture, MSMEs, trade, and real estate. Data gaps, weak climate risk pricing, and low insurance penetration amplify the risk.
- Infrastructure, transport, water, health, workforce-dependent industries, real estate, and urban development are also vulnerable to flooding, drought, water contamination, heat stress, disease outbreaks, asset damage, logistics disruption, and productivity losses.
Across these sectors, exposure is driven by climate dependence, weak infrastructure, low insurance coverage, limited finance, data and forecasting gaps, informality, and weak enforcement of land-use and building standards.
From an ERM perspective, organizations should prioritize these sectors for climate risk screening, scenario analysis, stress testing, credit appraisal, sectoral risk limits, and targeted resilience investment. This helps shift the response from reactive crisis management to risk-informed strategy, including opportunities in climate-smart agriculture, diversified energy, and risk transfer solutions.
IRMA: Beyond the immediate risks of droughts and flooding, what secondary or cascading risks should organisations and risk practitioners be preparing for?
FK: Beyond droughts and floods, organizations should prepare for secondary and cascading risks that can create wider economic and institutional disruption. These include supply chain fragility, rising logistics costs, reduced market access, food and energy inflation, weaker consumer demand, and slower economic growth. El Niño can also increase financial system stress through rising non-performing loans, insurance claims, liquidity pressure, and portfolio losses, especially where exposure to agriculture, energy, infrastructure, and MSMEs is high.
Other key risks include public health pressures, workforce productivity losses, migration, social instability, emergency policy measures, regulatory changes, and reputational damage where organizations appear unprepared or unresponsive. For risk practitioners, the main lesson is that these risks are interconnected and non-linear. A disruption in agriculture, for example, can quickly affect prices, credit quality, social stability, and business continuity. Organizations should therefore use enterprise risk management, scenario analysis, and systems thinking to map interdependencies, stress-test strategies, and build resilience against complex, system-wide shocks.
IRMA: Based on your experience, what are the most common preparedness gaps you observe among organisations, governments, institutions, or communities when responding to climate-related disruption?
FK: In my experience, the main challenge is not awareness of climate risks such as El Niño, but the gap between awareness and actionable preparedness. Many organizations, governments, and communities recognize the risk, but are not yet structured to respond effectively. The most common gaps include weak integration of climate risk into enterprise risk management, strategy, credit decisions, capital allocation, and business continuity planning. Climate risks are often still treated as sustainability or compliance issues rather than core business risks. There is also limited use of climate data, forecasts, early warning systems, and scenario analysis. Many institutions struggle to translate climate information into practical risk indicators, stress-testing assumptions, operational triggers, or preparedness actions.
Financial, operational, and infrastructure resilience also remain underdeveloped. Organizations often underestimate liquidity, credit, insurance, supply chain, asset, and productivity impacts, while business continuity plans are not always climate-informed. Coordination is another major weakness. Climate disruption cuts across sectors and jurisdictions, but responses are often fragmented across government, private sector, communities, and development partners. Informal systems and vulnerable communities are also frequently left out of formal risk planning, creating blind spots that can transmit shocks back into markets and institutions.
Finally, many institutions still view climate events as episodic crises rather than recurring and intensifying risks. The priority should be to embed climate risk into ERM, strengthen data-driven decision-making, invest in resilience, and build systems that are robust, adaptive, and able to respond to uncertainty.
IRMA: How can organisations effectively use seasonal climate forecasts, early warning systems, and risk intelligence to strengthen business continuity planning, operational resilience, and strategic decision-making?
FK: The value of seasonal climate forecasts and early warning systems lies in how well organizations turn them into timely, risk-informed decisions. Climate data should not remain separate from business processes; it should be embedded into enterprise risk management, risk registers, scenario analysis, stress testing, and business continuity planning.
Organizations should link forecasts to clear decision triggers, such as adjusting lending criteria, reviewing sector exposures, securing alternative suppliers, increasing inventory buffers, or activating contingency plans. This helps ensure early warnings lead to practical action. Climate intelligence should also inform budgeting, procurement, resource allocation, infrastructure resilience, workforce safety, emergency response, and long-term investment decisions. Over time, it can guide capital toward more resilient assets, geographies, and business models, including climate-smart agriculture, water efficiency, and diversified energy systems.
To be effective, this requires cross-functional capacity across risk, finance, operations, and strategy teams, supported by reliable data partnerships with meteorological agencies, regional climate centres, and development institutions.
Ultimately, organizations should move from passive use of forecasts to an intelligence-led decision-making model that strengthens resilience, protects value, and supports more adaptive business strategies.
IRMA: What role should boards, executive leadership, and risk committees play in ensuring organisations begin implementing actions now to improve resilience, protect critical operations, and minimise disruption should El Niño conditions materialise?
FK: Boards, executive leadership, and risk committees are critical in turning climate risks such as El Niño from abstract concerns into immediate, organization-wide action. Their role is to set the tone, urgency, accountability, and resources needed to build resilience.
Boards should elevate El Niño and climate risk into strategic oversight by embedding them in risk appetite, strategy, performance monitoring, and regular reporting. They should challenge management on exposure, preparedness, scenario analysis, and alignment with climate disclosure expectations such as IFRS S2.
Executive leadership must translate this oversight into action by integrating climate considerations into credit, operations, procurement, capital allocation, supply chains, contingency planning, and infrastructure protection. Early warnings should trigger practical decisions, supported by adequate financial, technical, and human resources. Risk committees should bridge oversight and execution by incorporating El Niño scenarios into ERM, stress testing, business continuity planning, and monitoring of vulnerable sectors, liquidity, capital, and mitigation actions.
Across all levels, the priority is to shift from reactive to proactive action through clear governance, defined responsibilities, performance-linked accountability, cross-functional alignment, simulations, and crisis response drills.
Ultimately, leadership determines whether El Niño becomes a disruption or a managed risk. Organizations that act early can protect asset quality, sustain operations, and identify opportunities in financing, innovation, and market differentiation.
IRMA: Looking beyond this particular event, what longer-term lessons should organisations take from El Niño to strengthen climate resilience and embed climate risk into enterprise risk management?
FK: El Niño is a reminder that climate risk is not a one-off disruption, but a recurring and intensifying feature of the operating environment. The key long-term lesson is to move from episodic crisis response to systematic, embedded resilience.
Organizations should mainstream climate risk into ERM, including risk identification, scenario analysis, stress testing, strategic planning, capital allocation, and risk appetite. Climate variability must be treated as a core business risk, not a separate sustainability issue. They should also strengthen forward-looking, data-driven decision-making by investing in climate data, analytics, and forecasting capabilities, and linking these insights to early action. Another lesson is the need for adaptive operating models. Supply chains, infrastructure, and business models should be flexible enough to respond to changing conditions through diversification, redundancy, buffers, and resilient investment.
El Niño also highlights the importance of systems thinking and inclusive resilience. Organizations need to understand how shocks spread across sectors, geographies, value chains, financial systems, and communities, including vulnerable and informal groups. Ultimately, resilience must be designed, embedded, and continuously strengthened. Organizations that institutionalize lessons from climate events will be better prepared, more adaptive, and better positioned to protect value and seize emerging opportunities.
IRMA: Finally, what message would you leave with Africa’s risk management community as organisations navigate an increasingly uncertain climate environment?
FK: Africa’s risk management community is at a defining point. Climate risk is no longer a distant environmental issue; it is a core financial, operational, and strategic risk affecting balance sheets, credit quality, supply chains, and competitiveness. The message is clear: treat climate risk as business risk. Embed it into ERM, credit, operations, capital allocation, and strategy, and move from reactive crisis response to anticipatory risk management using scenarios, early warnings, and forward-looking indicators.
Risk managers should act even with imperfect data by using practical tools such as sector heatmaps, internal proxies, and risk scoring models. They must also recognize that climate risk differs by sector, with agriculture, infrastructure, real estate, manufacturing, and trade facing distinct exposures.
Embedding climate into lending and investment decisions is essential. Climate-aware capital allocation protects portfolios, supports resilient and green investments, and avoids locking resources into vulnerable assets. Resilience should be viewed as a value driver, not a cost. Organizations that help clients and operations adapt will strengthen portfolio quality, recover faster from disruption, and remain competitive.
Finally, collaboration and upskilling are critical. Regulators, development partners, industry bodies, and institutions must work together while building capabilities in climate science, scenario analysis, ESG data, and impact measurement. Those who invest in resilience and skills today will be better prepared to lead in an uncertain climate future, as El Niño affects Africa.
