Natural Resource Volatility Reshapes Pharma, Life Sciences and Manufacturing Risk

Natural Resource Volatility Reshapes Pharma, Life Sciences and Manufacturing Risk
September 10, 2026 11 mins

Natural Resource Volatility Reshapes Pharma, Life Sciences and Manufacturing Risk

Natural Resource Volatility Reshapes Pharma, Life Sciences and Manufacturing Risk

Organizations that understand and address water, energy and climate pressures amid growing natural resource volatility are better positioned to strengthen resilience, support investment and sustain growth.

Key Takeaways
  1. Natural resource volatility is becoming an enterprise risk, with direct implications for operations, supply chains, liquidity and investment decisions.
  2. Water, energy, biodiversity and supplier dependencies can create interconnected exposures that amplify disruption across the value chain.
  3. Integrated risk analytics, scenario modeling and modern risk financing strategies help organizations strengthen resilience and support long-term growth.

Table of Contents

  1. Life Sciences Risk Rankings

  2. Where Natural Resource Risk Touches the Pharma Value Chain

  3. Water Stewardship as a Business Resilience Strategy

  4. Waste, Environmental Liability and Insurability

  5. Operational Resilience is Under Pressure from Compound Risks

  6. Biodiversity is Emerging as a Business and Innovation Risk

  7. Risk Financing Needs to Evolve with Exposure

  8. Turning Resource Risk into Resilience

Water scarcity, power constraints, biodiversity loss and climate volatility are increasingly influencing where pharmaceutical products can be manufactured, how supply chains operate and where organizations invest for growth.

In the past, these issues were primarily managed through a sustainability lens. Today, they carry direct implications for operational resilience, financial performance and enterprise value.

Pharma, life sciences and manufacturing organizations rely on complex manufacturing and supply networks that depend on reliable access to water, energy and critical infrastructure. As climate volatility, resource constraints, geopolitical disruption and regulatory pressures intensify, these dependencies are becoming harder to manage and more important to understand. Leaders should prioritize natural resource risk assessment to quantify how environmental risks could disrupt operations, strain supply chains, affect liquidity and influence capital decisions. Organizations that can quantify these exposures and embed resilience into enterprise risk management will be better positioned to protect growth.

Life Sciences Risk Rankings

  • #1

    Supply Chain or Distribution Failure

  • #18

    Property Damage

  • #21

    Concentration Risk

  • #30

    Weather/Natural Disasters (up from #37 in 2023)

    Source: Aon's Global Risk Management Survey, Industry Highlights – Life Sciences, 2025

These findings reinforce a broader challenge for life sciences organizations: Environmental risks do not sit outside business strategy. They can shape manufacturing continuity, supplier resilience and investment decisions across the value chain.

Where Natural Resource Risk Touches the Pharma Value Chain

Natural resource volatility can affect virtually every part of the pharmaceutical and life sciences value chain. Water, energy, materials, infrastructure and supplier networks all play a critical role in manufacturing continuity, product quality and future growth. Understanding these dependencies is essential to strengthen resilience and inform investment decisions.

  • Water: An Essential Resource Facing Growing Pressure

    Water is fundamental to pharmaceutical manufacturing. It supports production processes, cleaning, sterilization, cooling and quality control.

    As drought conditions become more frequent and competition for water resources increases, many organizations face greater operational uncertainty. Reduced water availability can disrupt production schedules, increase costs and create new compliance challenges. As a result, assessing water risk is becoming as important to pharmaceutical companies as evaluating equipment reliability or regulatory compliance.

    Water risk is no longer simply an environmental issue. For many pharmaceutical manufacturers, it is becoming a strategic business resilience concern and a critical component of broader natural resource risk management.

    As demand for power and water rises across industries, life sciences organizations may face growing competition for the resources needed to support manufacturing operations and future expansion. 

    “The growth of large-scale data centers is putting additional pressure on power and water availability,” notes Steve Schell, Global Life Sciences Leader. “For pharma and life sciences companies, that could increasingly influence where manufacturing capacity can be built or expanded as resource constraints intensify.”

    The implications extend beyond day-to-day operations. Resource availability is shaping facility siting decisions, expansion plans and capital investment priorities. 

  • Energy: Reliability Matters as Much as Transition

    Energy remains a critical dependency across manufacturing operations, laboratories, cold storage facilities and distribution networks.

    While decarbonization is still an important business priority, organizations must balance sustainability goals with operational reliability. Growing electricity demand, electrification and hyperscale data center development are increasing competition for power, making energy security as critical as energy transition. Managing power availability and energy constraints is therefore a core component of resilience planning. It’s essential to production continuity, asset protection and product integrity. 

    “Disruptions can affect manufacturing schedules, cold chain performance and the ability to meet patient and customer needs,” says Schell. “Energy resilience now sits at the intersection of climate risk, operational resilience and natural resource volatility.”

  • Supply Chains and Materials: The Hidden Concentration Risk

    The pharmaceutical industry relies on extensive and highly specialized supply networks, including contract development and manufacturing organizations (CDMOs) that play a critical role in production and supply continuity.

    Many organizations have spent years diversifying suppliers and strengthening continuity plans. However, supply chain resilience also depends on understanding whether multiple suppliers share the same environmental exposures. Drought, flooding, heat stress and infrastructure disruption can affect multiple suppliers simultaneously, particularly when they are concentrated within the same geographic region.1

    Aon's Global Risk Management Survey findings highlight this challenge. For life sciences organizations, supply chain or distribution failure ranked as the number one risk in 2025, while concentration risk ranked 21st. At the same time, weather/natural disasters rose from 37th in 2023 to 30th in 2025, suggesting that organizations increasingly recognize the role environmental conditions can play in operational disruption through supply chain and concentration risks. This reinforces the need to understand not only individual supplier relationships, but also the environmental exposures that may affect multiple suppliers simultaneously.

    Organizations that lack visibility into these shared exposures may underestimate the true concentration risk within their supply chains. For example, a single-site disruption contributed to approximately 60% of U.S. intravenous fluid supply shortages.2 When critical manufacturing capacity is concentrated to a limited number of locations, wider market consequences are vast.

    As natural resource volatility increases, supplier mapping, risk analytics and scenario modeling are even more critical for building supply chain resilience. Understanding where environmental exposures overlap with critical suppliers can help organizations make better decisions about resilience investments, inventory management, alternative sourcing and risk financing. Supply chain resilience consulting can then help turn these insights into actionable continuity and growth strategies.

Case Study: Water Stewardship as a Business Resilience Strategy

Water Stewardship as a Resilience Strategy

Water scarcity is now a business resilience issue. It can directly affect:

  • Revenue through production interruptions
  • Costs through higher utility and compliance expenses
  • Growth through constraints on future manufacturing expansion
  • Enterprise value through operational and supply chain disruption

Many leading pharmaceutical companies, including AstraZeneca,3 are treating water stewardship as a business resilience priority because of its impact on manufacturing continuity, supply chains and growth.

Waste, Environmental Liability and Insurability

Natural resource volatility is also reshaping environmental liability exposures.

Growing scrutiny around pharmaceutical waste management, contamination risks and environmental impacts is creating new regulatory and reputational challenges. At the same time, organizations are facing increasing expectations from investors, regulators and other stakeholders regarding environmental stewardship.

The implications extend beyond compliance, risk management and insurance.

Environmental incidents can create liability concerns, influence insurer perceptions and affect long-term insurability. As risks evolve, organizations may need to evaluate whether traditional insurance approaches adequately reflect their emerging exposure profiles.

This is where environmental risk management, liability strategy and risk financing converge. Organizations that understand how waste, contamination, regulation and resource volatility interact will be better positioned to manage liabilities, protect insurability and make more informed risk financing decisions. Environmental risk consulting and environmental liability advisory services can help align remediation, disclosure and insurance strategies with evolving exposures.

Operational Resilience is Under Pressure from Compound Risks

For pharmaceutical and life sciences organizations, natural resource risks rarely occur in isolation. 

  • Drought can reduce water availability while increasing cooling demand.
  • Heat stress can drive higher electricity consumption at precisely the moment when power systems are under increased strain.
  • Supplier concentration can magnify disruption if multiple facilities or suppliers are exposed to the same climate event.

The resulting business impact can exceed the effects of any single risk. Organizations therefore need to model compound climate and resource risk scenarios to understand how disruptions can cascade across operations, supply chains and financial performance. Doing so can help quantify climate-related business interruption and inform more resilient operational and management strategies. 

How Multiple Risks Can Amplify Operational Disruption

Extreme weather, resource constraints and supply chain dependencies can combine to create cascading operational and financial impacts.

How Multiple Risks Can Amplify Operational Disruption

Biodiversity is Emerging as a Business and Innovation Risk

Biodiversity loss is often discussed in the context of sustainability reporting and environmental responsibility. However, for pharmaceutical and life sciences organizations, it is becoming an operational, innovation and financial issue.

Approximately 80% of medicines trace their origins to natural sources.4 The health of ecosystems therefore has important implications for future research, development and innovation. As climate pressures intensify, ecosystems face growing stress from heat waves, droughts, flooding and changing environmental conditions. These impacts can alter biodiversity patterns, affect access to natural resources and create new supply chain challenges. 

Understanding biodiversity risk is essential for long-term resilience planning for pharmaceutical companies, from protecting innovation to securing access to critical biological resources to support sustainable growth. As a result, many pharmaceutical organizations are seeking to move beyond disclosure and use climate and nature risk insights to support strategic decision making.

How Climate Hazards Can Amplify Nature-Related Risk

Climate Hazard Nature Impact Business Impact
Heat stress Loss of species and habitat resilience Reduced access to biological resources
Drought Water scarcity and ecosystem degradation Manufacturing and supply chain disruption
Flooding Habitat loss and ecosystem disruption Facility and supplier interruption
Extreme weather Biodiversity stress Operational and financial risk

Risk Financing Needs to Evolve with Exposure

As natural resource risks become more interconnected, traditional insurance programs may not always fully address emerging sources of disruption.

Indirect supplier interruptions, environmental liabilities and climate-related business interruption exposures can create gaps between the risks organizations face and the coverage available to them. These gaps can affect liquidity, continuity planning and the ability to recover quickly after disruption.

Organizations therefore need a broader perspective on risk financing. Business interruption valuation, risk financing and captive insurance capabilities can help organizations quantify potential financial impacts, assess gaps in existing protection and consider how insurance, retention and alternative structures could respond. Climate, nature and supply chain analytics can provide the exposure insight needed to support those decisions.

These insights can support more informed decisions about:

  • Insurance program design
  • Coverage limits
  • Retention strategies
  • Captive utilization
  • Resilience investments
  • Alternative risk transfer structures

Captives may provide additional flexibility for difficult-to-insure exposures, while alternative risk transfer solutions can help support liquidity and financial resilience during periods of disruption.

Quote icon

As risks evolve, resilience planning and risk financing can no longer operate in silos. Organizations need strategies that connect environmental exposure with financial decision making.

Steve Schell
Global Life Sciences Industry Leader

Turning Resource Risk into Resilience

Aon can help organizations connect natural resource, climate and supply chain insights with resilience and risk financing decisions. By identifying critical dependencies, modeling compound disruption and evaluating financial protection, leaders can make more informed decisions about continuity, capital and growth.

Aon’s Thought Leaders 

Steve Schell
Global Life Sciences Industry Leader

With contributions from Guido Benz, Brian DeBruin, Sarah Goodman, Liz Henderson, Maureen Reilly, Aaron Simpson.

1 Weather Disasters Increase Risk for U.S. Drug Supply Chain Disruption, New ACS Research Shows, PR Newswire
2 Weather Disasters Increase Risk for U.S. Drug Supply Chain Disruption, New ACS Research Shows, PR Newswire
3 Water stewardship, AstraZeneca
4 Beyond carbon: Embedding nature risks across the pharma value chain, Quantis

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This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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