Financial Resilience Institute
Sep 17, 2025 · 5 mins
Is More Support Needed? The Effects of Extreme Weather Events on Financial Vulnerability
New Intelligence Report examines the impact of extreme weather events on the financial vulnerability of Households and Small and Medium Enterprises (SMEs) in Canada
Authored by: Katie Sutter, Eloise Duncan and Kujtim Koci.
Vancouver, B.C. | September 2026 - Climate change, driven by fossil fuel production and use, is increasing the likelihood and severity of many weather-related events, affecting households, Small and Medium Enterprises (SMEs) and communities. Extreme weather events are financial resilience shocks that can deepen existing financial vulnerabilities and negatively affect financial, social and sustainability outcomes. Financial Resilience Institute is advancing understanding of these impacts through its world-leading Financial Health and Resilience Index and longitudinal Financial Well-Being Studies (2017–2026), supporting its Purpose of ‘Building Financial Resilience and Well-Being Together.’
Financial resilience is defined and measured as a household’s ability to ‘get through financial hardship, stressors and shocks as a result of unplanned life events’, with this measured by the Institute’s peer-reviewed Financial Health and Resilience Index model at the national, provincial, segment and individual household level in Canada since February 2020, pre-pandemic [1].
Business financial resilience is defined as the ‘ability of a small and medium enterprise (SME) to ‘withstand financial challenges, stressors or shocks from unplanned business events, while progressing toward its business and financial goals’ [2].
Key Findings
- Extreme weather events are widespread and negatively impact the financial health and resilience of households.
As of February 2026, 20% of Canadians report being impacted by extreme weather events (i.e. fires, floods or extreme heat) over the previous 12 to 24 months; 33% of these same households report this has negatively impacted their financial situation. - The financial resilience gap is widening for households impacted by extreme weather events. Households that have been negatively impacted by extreme weather events over the past 12 to 24 months have a mean financial resilience score of 49.3 and are ‘Financially Vulnerable,’ as of February 2026, based on the Institute’s peer-reviewed Financial Health and Resilience Index. This compares to a mean financial resilience score of 54.5 for households not impacted that are in the ‘Approaching Resilience’ segment.
- The delta widened from 3.9 Index points in February 2024 to 5.2 in February 2026.
The Financial Health and Resilience Index shows a widening resilience gap for impacted households in Canada over the past two years alone, with similar outcomes expected in other countries. SMEs are also being affected from a business financial health and resilience standpoint and face growing risks and protection gaps. - Impacts extend across all financial resilience segments but are not equal.
Negative impacts were reported by 24% of ‘Extremely Vulnerable’ households, 24% of ‘Financially Vulnerable’ households, 21% of households ‘Approaching Resilience’ and 14% of ‘Financially Resilient’ households. Among affected households, 54% of ‘Extremely Vulnerable’ households completely agree that extreme weather negatively affected their financial situation, compared with 34% of ‘Financially Resilient’ households. - Access to help is associated with stronger outcomes.
Households able to access help in understanding how storms, floods or fires could affect them had a mean financial health and resilience score of 53.7, compared with 39.1 among those unable to access help—a 14.6-point Index difference. This indicates an association, without establishing causation. Resources such as the Intact Centre on Climate Adaptation’s Home Flood Protection Check-Up and FireSmart Canada can help households assess and reduce risk. - Canadian households worry about extreme weather events.
66% of households worry that worsening extreme weather presents increased risks to their financial resilience; 64% believe insurers can do more to reduce customer stress; and 85% and 88%, respectively, believe municipalities and provincial governments should do more to help their communities prepare. - Small and Medium Enterprises (SMEs) are being impacted by extreme weather events, and many face protection and continuity gaps. As of December 2025, 14% of SMEs reported a negative financial impact on their business from extreme weather over the previous 12 to 24 months based on the Institute’s Canadian SMEs 2026 Business Financial Health and Resilience Study. 31% of these SMEs report insufficient business insurance to protect against the unexpected as of December 2026.
Emerging Implications and Call to Action
Canada’s National Adaptation Strategy recognizes climate change as a ‘financial vulnerability multiplier,’ but household financial health and resilience is not explicitly identified or measured as an outcome. Household and SME financial resilience should be embedded across climate adaptation, emergency management, financial literacy, poverty reduction and flood-insurance strategies.
Governments, municipalities, insurers, financial institutions and community partners should prioritize more vulnerable households and SMEs through accessible risk information, affordable and appropriate insurance, tailored preparedness measures, business continuity planning, financing and emergency supports. Initiatives should be assessed not only by reach, but by whether they improve household and business financial health and resilience outcomes over time.
Policymakers, climate change and social finance leaders can embed financial resilience into adaptation strategies and target support where it is needed most. There is also a significant opportunity to use evidence to measure and track which policies, interventions and collective investments contribute to improved financial and overall resilience outcomes over time. This can inform more proactive, evidence-based policy and decision-making, strengthen the resilience of communities and help make the most of available resources.
“Extreme weather events can deepen financial vulnerability. Our Financial Health and Resilience Index shows a widening financial resilience gap for impacted households in Canada, while SMEs face growing risks and protection gaps. Policymakers, insurers and others can build financial resilience into adaptation strategies and targeted support interventions where it is needed most. Tracking which policies and investments improve outcomes over time can guide more effective action and strengthen financial and overall resilience.”
-Eloise Duncan
CEO and Founder, Financial Resilience Institute
Footnotes
[1] Information on the Institute’s peer-reviewed Financial Health and Resilience Index is here.
[2] The February 2026 Financial Well-Being Study has a sample size of 5429 adult households from a representative sample of the population by household income, age, province and gender. Sample sizes for all Studies are on page 39 of the full Intelligence Report.
[3] ’Extremely Vulnerable’ households have a financial resilience score of 0 to 30; ‘Financially Vulnerable’ a score of 30.01 to 50; ‘Approaching Resilience’ a score of 50.01 to 70, and ‘Financially Resilient’ a score of 70.01 to 100.
[4] Access the full report here.
About Financial Resilience Institute
Non-Profit Financial Resilience Institute is a leading independent authority on the financial health, resilience and well-being of households and small and medium businesses in Canada and globally. We believe in the power of evidence to build resilience, improve lives and strengthen communities. We partner with financial institutions, policymakers, innovators and employers to design and implement solutions that improve financial resilience, health and well-being for all.