Socio-economic and climatic stresses affect local communities’ vulnerability to flooding. Better incorporation of socio-economic stress in local vulnerability assessments is important when planning for climate adaptation. This is rarely done due to insufficient understanding of their interaction, in both theory and practice. The omission leads to critical weaknesses in local adaptation strategies. This study analyses how socio-economic stress interact with climatic stress and shape local vulnerability to flooding, and how such stress can be more efficiently managed within local government organisations. A framework containing potential stresses was developed and applied to investigate how socio-economic stress affected exposure, sensitivity, and adaptive capacity in two case studies, using interview and group exercise transcripts. Cases consisted of major development projects in two Swedish municipalities, Gothenburg and Lilla Edet. The cases were similarly exposed to climatic stress but differed in socio-economic context, and previous professional climate change experience. Fierce foreign competition and market structure were seen as the two most significant socio-economic stresses influencing local vulnerability to flooding through shaping the ‘local’ worldview. In falling order sensitivity, exposure, and adaptive capacity were seen to be influenced by the socio-economic stresses. Two approaches to efficiently incorporate climatic and socio-economic stress in local management are proposed: shifting the focus of vulnerability assessments towards future sensitivity of people and settlements, rather than on the current infrastructure’s sensitivity, would facilitate their use in planning and by ‘mainstreaming’ adaptation into long-term strategic planning vulnerability would be more dynamically addressed and periodically revised.