By Thomas Karl, Kimberley Drouin, Timothy Hall, Terence Thompson, and Matt Macfarland

Highlights

Meteorologists are forecasting a powerful El Niño event that rivals or exceeds intense events from recent decades, with an 81% probability of reaching a “very strong” state in the October-December 2026 window. 

There is high regional variability in historical El Niño impacts, and risk projections should be understood as changes in probabilities rather than predictions. That said, relatively high-confidence impacts include heavy precipitation and landslides in California and other parts of southern North America; warmer winters across northern North America; severe drought in Central and South America; and hotter, drier weather that increases wildfire risks across Southeast Asia and Australia.

The state of other recurring climate patterns over the coming months can have a strong influence on the strength of expected El Niño impacts. Risk management should be regional, focusing on relevant El Niño events from the past and on the climate patterns that affect that part of the world.

Since June 2026, major meteorological centers have indicated that El Niño conditions are present in the tropical Pacific and are likely to strengthen through late 2026 and early 2027. The consensus forecast indicates a strong event that is likely to rival or exceed the intense El Niño events of 1982-83,1997-98 and 2015-16, which led to floods, droughts, wildfires and anomalous regional temperatures and tropical storm activity.

Canonical impacts vary from region to region, but flood risk, drought, anomalous temperatures and modified tropical cyclone pathways are some of the most prevalent.  As of July 2026, the S&P Global Climate Center of Excellence has relatively high confidence in the following impacts:

  • Increased frequency and severity of heavy precipitation, floods and landslides during the cold season in parts of southern North America such as California.

  • Severe drought and heat across Central America, northern South America, Southeast Asia, Southern Africa and Australia, peaking during the Southern Hemisphere summer (December 2026 to March 2027).

  • Increased flood risk peaking during the Southern Hemisphere summer in southeastern South America, East Africa and coastal Peru/Ecuador.

Climate physical risks have the potential to place financial costs on companies, and if regional impacts associated with El Niño manifest over the coming months, those climate costs could be substantial. 

In this report, we first summarize how the El Niño–Southern Oscillation is measured and then discuss high-confidence impacts, as well as other regional impacts associated with El Niño. An appendix describes the recurring climate patterns, referred to as modifiers, that influence these impacts.

From a business risk perspective, the regions requiring the greatest attention are those where several factors overlap: canonical El Niño risk, the state of relevant modifiers and asset or supply-chain exposure.  A strong El Niño indicates where probabilities of various risks are shifted, not where impacts are certain. This framing avoids two common errors that can distort risk assessments: assuming that a strong El Niño guarantees a canonical impact everywhere, and assuming that a suppressed signal at a regional or basin-wide level means local risk is negligible.

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