A nor’easter has closed schools and disrupted travel across the East Coast on Wednesday. But storms can also cost companies billions of dollars in damage and lost revenue, so knowing when and where they’re going to strike is a big business in and of itself.
“The weather impacts everything one way or the other,” AccuWeather founder Joel Myers recently told CNBC. From their base in State College, Pennsylvania, AccuWeather works with half of the Fortune 500, Myers said, to forecast weather and tell those companies how to prepare for extremes. (Watch the full interview below.)
Shifting weather patterns can wreak havoc on crops. Airlines are forced to cancel thousands of flights in anticipation of big winter storms. CNBC has reported before on corporate executives blaming poor company performance on extreme weather.
Having an advance warning of severe weather can also help protect employees. In 2008 a Caterpillar factory in Oxford, Mississippi, was hit by a tornado. Fortunately, everyone inside sheltered in time, Myers said, thanks to an AccuWeather warning. The plant was damaged, but no one was seriously hurt, The Wall Street Journal reported at the time.
“Tornadoes could kill,” Myers said. “The average advanced notice of a tornado warning by the national weather service is eight minutes, ours are 20.”
But it’s not just extreme weather that can have a big effect on business. Retail companies see different customer patterns based on the weather in a given area. By applying data analytics, AccuWeather predicts what consumer demand will be and sells that information back to the companies.
He cited Starbucks as another client. By correlating weather patterns and drink orders, the coffee seller can get a predictive edge on what customers will be ordering on a given day, and where. Algorithms “learn” what cold weather means for different areas and can suggest staffing levels to match.
“At 65 degrees, you get a different mix in Seattle than you do in Atlanta,” he said. “Based on the temperature, they know what the mix of hot and cold coffee will be. … and how many people you should have working behind the counter.”
AccuWeather has cooperative agreements with countries around the world, Myers said, giving the company a massive amount of weather data used for forecasting. More than 100 meteorologists sift through that data at the State College facility. CNBC has found that by some measures, AccuWeather is the most accurate weather predicting app.
“We were the first with big data,” Myers said. “Now big data’s the big thing.”