Archive for the ‘Hurricanes’ Category

Prescient Words

Sunday, April 10th, 2016
Mega Disasters

Mega Disasters

I had blogged about Mega Disasters: The Science of Predicting the Next Catastrophe, an engaging book by mathematician Florin Diacu. I was organizing my notes of the book before returning it to the library, when I came across the following passage (pages 84-85):

“It was New Orleans that was hit in 2005. It might be New York the next time. Nobody understands this danger better than the experts in hurricane prediction.” And then the author quotes a passage from hurricane forecasters that described what became known as Super Storm Sandy in all but name. The book was published in February 2010. The words resonated with me as I am working on a project to help small businesses that sustained significant losses as a result of Sandy. This passage was presented in the context of the difficult decisions emergency personnel have to make when deciding whether or not to order an evacuation. Given the time and logistical complexity required to evacuate a densely-populated city, prudence argues for ordering the evacuation. But should the storm veer off into the Atlantic, the evacuation, which is a major undertaking, would prove unnecessary. I cannot recommend this book strongly enough; the author’s writing style is engaging and the material remains timely.

Book of the Week: Katrina, After the Flood

Sunday, January 3rd, 2016
Catching Up Ten Years Later

Catching Up Ten Years Later

One of my favorite articles from Inc. magazine explored the decline of a Florida community ten years after it had been struck by Hurricane Andrew. As businesses lost revenues and had uninsured losses, they had to close, laying off employees, who no longer had discretionary income to spend at local businesses which sustained a loss of revenue….it was a vicious cycle and a number of residents were forced to relocate in search of jobs and other opportunities. I particularly appreciated the article, because typically disasters command attention when vivid images of physical damage can be broadcast. But when the news cycle has moved on to other stories, the people impacted by the disaster are left to rebuild without the sense of urgency conveyed by the initial media coverage. I know from my own experience of 9-11 that it is a long, long time before things return to normal – if they ever do. So I had Katrina, After the Flood on my list for some time and finally got around to reading it.

Gary Rivlin, a staff reporter for the New York Times, first went to New Orleans to assess the damage wrought by Hurricane Katrina. He observed that 80 per cent of the houses in the city had been flooded, schools and businesses were ruined and the city’s water and sewer system were unusable. In this book, he traces what happens in the aftermath of a major disaster. Boarded-up businesses, some 21,0000 of the 22,000 businesses registered in New Orleans, were still shuttered six months after the storm. Six weeks after the storm, New Orleans laid off half of the municipal workforce. With so many formerly economically productive businesses and workers unable to contribute to the tax base, the community could not possibly finance its own recovery.  What we learn is that life doesn’t go back to “normal”; people re-build or they move on, but the community is permanently changed. It is a gripping read; I highly recommend it.

Hurricane Joaquin Offers Lessons on Business Continuity

Thursday, October 8th, 2015

New York TimesThis morning’s edition of the New York Times includes a very informative article on the importance of continuity plans for small businesses, particularly after Hurricane Joaquin moved up the East Coast. I was quoted and my book cited throughout the article, but of course, until the newspaper is published, I do not know of the other sources and information that will be included. So I really enjoyed reading the article and learning from the other sources cited. For me, the key takeaways in the article, which happen to be consistent with the advice given in Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery, include:

  • The failure of small businesses to prepare. The 2015 Travelers Business Risk Index found that only 21 per cent of small businesses have continuity plans.
  • The devastating consequences of the failure to prepare. The article cites the experience of the U.S. Federal Emergency Management Agency, which indicates that 40 to 60 per cent of small businesses never recover after experiencing a natural disaster. The article relates the heartbreaking story of the pizzeria impacted by the floods in South Carolina. The business owner did not have a continuity plan in place or flood insurance and plans to apply for FEMA aid. However, and it is probably too soon after the floods for South Carolina businesses to appreciate this, FEMA is not set up to rebuild unprepared small businesses.
  • The need for simplicity in business continuity planning. The article cites an effective plan that is three pages in length, clear and easy to understand.
  • The need for continuous learning and improvement as part of a team effort.  The managing director of a leather business in New Jersey incorporated lessons learned from Hurricane Sandy to improve its level of preparedness for future hazards. He is moving his business to a more secure facility and has retrofitted his data center for better flood protection. His business continuity plan benefited from input from each of the company’s departments; preparing is not the sole responsibility of emergency managers.
  • The unique vulnerability of food service businesses. Restaurants need to verify that they have appropriate insurance coverage for the losses due to food spoilage, which can be substantial.
  • Unique risks specific to local hazards, such as earthquakes. The article cites the measures taken by a California winery to address earthquake risks.
  • The availability of free resources to inform small business preparedness efforts, including (my first business is featured as a case study on this site).
  • Finally, the long-term emotional consequences of living through a major disaster. Don’t underestimate this as a factor limiting your productivity as a small business owner. One small business leader who worked through Hurricane Sandy spoke of his sense of uncertainty and frequent calls to his psychologist.

And I love the quote that appears at the end of the article. The business leader impacted by Hurricane Sandy in New Jersey said, “you can’t prevent bad things from happening, but you can change how you respond.” I just love the New York Times; I read it on my iPad over breakfast every morning. It is part of my routine that sets me up for a productive day, because I always learn something when I read the NYT.

NBC News Advises Viewers to Get Their Insurance “Go Kits” Ready

Thursday, October 1st, 2015
Insurance Files to Go

Insurance Files to Go

Even if Hurricane Joaquin fails to strike with full hurricane force, it will leave much of the East Coast with severe rains and likely flooding, so it pays to prepare. This evening, NBC News included my advice in its report recommending that viewers have their insurance “go kits” ready in advance. I like the metaphor of the “insurance go kit” because just as your physical “go kit” should be stocked with batteries, bottled water and other supplies, your insurance files should be ready to go on a moment’s notice.

That is because what you do in advance of a disaster will determine if your insurance claim is paid in a timely manner or paid at all. You need to set yourself up for success by ensuring you have appropriate coverage for your risks and that you can substantiate your losses, when needed. You need to have a flood insurance policy for thirty days before coverage takes effect, so if you are not appropriately insured, it may be too late for this storm, but start to put a plan in place for the next one.

Meanwhile, there are some basic steps you can take to be ready. If you have not already done so, give your insurance carrier wire instructions to electronically deposit paid insurance claims into your bank account. In the event of a severe storm, it may not be possible, or even safe, for you to retrieve a paper check and deposit it at your bank. Electronic banking services can reduce the risk of your cash flow disruption and are easy to set up. Thanks to Kristin Wong of NBC News for informative and helpful reporting.

Tropical Storm Erika Strikes Dominica

Monday, August 31st, 2015
Dominica in the Caribbean

Dominica in the Caribbean

Tropical Storm Erika inflicted substantial damage on the Caribbean island of Dominica, killing at least twenty people, washing away homes and eroding roads. Dominica is an island of pristine natural beauty, for which it was given the moniker of “The Nature Island”. Tropical rain forests cover over two-thirds of the island which, despite its small size, offers extraordinary ecological diversity, as the home to over 1,200 plant species.  The lush vegetation is supported by rivers, lakes and waterfalls. Dominica’s Morne Trois Pitons National Park was the first UNESCO World Heritage Site in the eastern Caribbean. I first came to know Dominica and its beautiful people in connection with a project which becomes especially relevant in the context of a severe hazard, such as Tropical Storm Erika.

Last summer one of my graduate student interns, Alejandro Witschi, worked with me on a project on disaster risk reduction communications in the Caribbean region on behalf of the United Nations Development Program and the United Nations Office for Disaster Risk Reduction. Our work plan entailed consulting with the key stakeholders in the region: the national emergency management offices of sixteen Caribbean countries (including Dominica), regional partners and NGO’s, such as the the French Red Cross, Oxfam, Plan International, Save the Children, the Spanish Red Cross, UNICEF and World Vision International. The results of our work included a report we co-authored and I will quote here from page 2:

“The Caribbean region experiences multiple hazards: the region is prone to hurricanes, floods, flash floods, tsunamis, landslides and mudslides. Some islands experience earthquakes and volcanic eruptions. The physical risk is combined with socioeconomic factors, such as high population density, fast demographic growth, inequality and great poverty. The combination of these factors results in highly vulnerable communities, with few coping capacities in the event of disaster. Moreover, climate change is likely to negatively affect disaster trends in the region. In addition, the Caribbean region is at elevated risk owing to the highly concentrated impact of hazards on small and undiversified economies. So-called “SIDS” (or Small Island Developing States) are highly exposed to a range of hazards, but precisely because of their small size, a very large proportion of their total produced capital is at risk. The 2013 Global Assessment Report global risk model found, for example, that certain Caribbean countries could expect to lose more than 30 per cent of their value of their urban produced capital to the wind damage caused by a catastrophic, one-in-250 year cyclone. SIDS are among the countries that contribute the least to carbon emissions but are at risk for the greatest losses due to climate change, including disaster losses, that are projected to increase.”

In addition to contributing to disaster relief organizations, we can support Dominica’s recovery by paying a visit as the economy is largely dependent on tourism. The tourism ministries of Dominica’s Caribbean neighbors have donated vacation packages to online charity auctions to raise needed funds for disaster relief. You can find them using the various Internet search engines. UPDATE (October 1): Dominica is supporting a social media campaign which aims to show how areas previously devastated by Erika have been restored, showing the progress of the reconstruction. The government is offering prizes to the winning photographers.

The 2015 Storm Season Has Begun

Monday, June 1st, 2015

The 2015 storm season is officially underway. The experts at Colorado State University have released their forecast, calling for a below-average hurricane season in the Atlantic this year. Between now and November 30, we can expect seven named storms. Of those, three will likely become hurricanes and one will reach major hurricane strength with sustained winds of 111 miles per hour or greater. While the news of a below-average storm season is welcome news, we should not become complacent. Even a moderate hurricane can cause severe damage. And of course, the summer months also bring tornadoes, wildfires, droughts, thunder, lightning and rain storms. So it’s time to refresh the drill, update the “go-kit” and make sure all of your business continuity preparations are up to date. The increased news attention focused on severe weather offers the opportunity to remind your employees, family members and suppliers of basic preparation measures. So now is the time to do it.

It’s That Time of Year Again

Friday, June 22nd, 2012

Image Courtesy of NOAA

The National Hurricane Center has issued an advisory predicting that thunderstorms and heavy rainfall in the southern Gulf of Mexico have a 70 percent chance of becoming a tropical cyclone over the weekend. The consensus among the forecasters is that 2012 will not be a severe storm season.  Let’s hope that they are correct.

Hurricane Season 2012 Has Begun

Monday, June 4th, 2012

Thankfully, meteorologists predict a relatively mild storm season, but that is no reason for complacency. Unfortunately, complacency is still the norm in the small business sector. Travelers Insurance Company released a survey, on the first official day of the hurricane season, which found that the majority of small businesses are unprepared for business interruptions arising from storms of other disasters. Travelers gathered information from the participants at last month’s U.S. Chamber of Commerce Small Business Summit on their levels of readiness. Just over half of small businesses polled reported that they do not have a written business continuity plan and 57% lacked confidence that their insurance will cover financial losses.  “While their larger counterparts may have the capital to self insure and cover gaps, a smaller enterprise without the same resources may be forced into bankruptcy,” said Marc Schmittlein, CEO of Travelers’ small commercial accounts business. “This has implications for not only small business owners, but also for their communities and our economy at large.”

Small Businesses Recovering From Hurricane Irene

Monday, August 29th, 2011

Hurricane Irene struck in an unexpected way, causing greater damage to mountainous areas removed from the coast than to direct coastal exposures. Irene brought Vermont the worst flooding in over 100 years. The following are tips modified from an earlier blog posting for Nashville residents coping with epic, 1-in-500-year floods, but they are relevant to the affected small businesses today:

1.    Rapid response is critical. Many small business owners will be in a state of shock and disbelief as a consequence of the disaster.  However difficult it may be, they must manage their emotions and work to restore operations as soon as possible. The choice is not whether to recover quickly or whether to recover at a more measured pace.  The choice is whether to recover quickly or not to recover at all.  A study of small businesses affected by the 1993 World Trade Center bombing found that of those businesses that could not restore operations within five business days, 90% of them were out of business within one year. Prioritize your business needs according to relative urgency and delegate where necessary.

2.    Mitigate your losses. To establish a valid property insurance claim, you must demonstrate to your insurer that you acted in good faith to mitigate your insured losses.  Consider a hypothetical example.  Let’s imagine that you have returned to your property and you see broken glass about the site. You must take reasonable steps to insure that the broken glass will not injure people.  Insurance companies are not very tolerant of passive policyholders who fail to act in their interests to limit losses. Limit subsequent losses to your business by taking prudent steps, such as restoring fire sprinklers or other equipment that may have been damaged by the storm.

3.    Identify your implicated policies. You should invest the time and effort required to examine all insurance policies implicated in the disaster, rather than foreclose options for coverage by limiting the scope of your review. Begin with insurance policies for first-party property losses that cover direct property damage, including collateral damage and indirect property damage, such as business interruption losses and loss-related expenses.  Next review all-risk policies, named peril policies, business owner’s policies, policies covering particular endorsements, valuable papers and records policies.

4.    Provide timely notice. Your business owner’s policy likely requires you to provide timely notice to your insurance company of covered losses.  Do not forfeit indemnification for a covered loss by failing to give timely notice. If you are in doubt as to whether an item is covered by your policy, err on the side of caution and include it in your claim.

5.    Report the facts, don’t diagnose the cause. Think of the words of Sergeant Joe Friday, “Just the facts, ma’am”.  Here is an example of why you should not be a diagnostician.  A sole proprietor worked from her home near the World Trade Center on 9-11 and experienced a systems crash.  She concluded that the crash was most likely due to the loss of electrical power that was the result of the terrorist attack and so notified her insurer.  Because her policy did not include an endorsement for interruption of electrical supply, that portion of her claim was denied.  In fact, the damage to her computer was the result of soot and ash clogging the fan of her computer, a peril that was covered by her policy.  The denial of coverage and dispute that followed could have been avoided had she sent a description of the problem without the diagnosis.  Had the insurance adjuster inspected the damaged computer, he would have seen the soot and ash in the machine and likely authorized payment on the claim.  Her hasty diagnosis resulted in a denial and delay of her claims payment.

6.    Inspect your IT and other electronic assets at least twice to ensure that you have not overlooked anything. I began hearing unpleasant grinding noises emanating from my PC when I returned to my office following the 9-11 disaster.  I suspect I had not heard them earlier because of the background noise outside my office as work was being done to restore electricity and other essential services. Upon closer examination, I learned that the noise signaled an imminent hardware failure. By inspecting each IT asset twice, I avoided the error of submitting an incomplete claims report.

7.    Document your loss mitigation and other loss-related expenses; your business owner’s policy likely covers them.  Such expenses might include overtime wages paid to employees who work to restore the business, lease payments for alternate office facilities when your primary space has been rendered unusable by the flood, costs of purchasing assets for temporary business use and so forth.

8.    Get help if you need it. You are likely to experience a range of emotions following a disaster, from disorientation to shock and disbelief to grief. This is not uncommon and may continue for some time after the disaster.  You won’t be able to look after your employees and family if you are run down.  Get the support you need.

9.    Assess your performance. Review your business contingency plan and, in particular, your employee training to identify areas for improvement so you will be better prepared for the future.  You can and will learn from this difficult experience.

10.    Exercise care when negotiating continued insurance coverage. Premium increases following a major disaster are not uncommon, but there are steps you can take to protect yourself.  In particular, be aware of the “paying more/getting less” phenomenon in which increases in insurance premiums can be dampened by excluding risks that had previously been covered. Also, be prepared to demonstrate to your underwriter the features of your business protection plan that make your business a better risk.

It’s Not Over Yet

Wednesday, October 6th, 2010

As the North Atlantic hurricane season ends November 30, we have two months remaining before we can breathe a sigh of relief. However, these are the peak months of the storm season. Remember that it was in the month of October (2005) that Hurricane Wilma, a Category 5 storm, struck Florida and is now remembered as one of the five worst Atlantic hurricanes in terms of damage expense. A recent study  by Colorado State University forecasts above-average Atlantic storm activity over the next week. Another modeling agency, Risk Management Solutions, expects one or two more named storms to develop before the 2010 season ends. What is particularly worrisome about the 2010 hurricane season is that it coincides with high unemployment, record deficits at both the state and federal levels and persistent economic weakness. According to the Institute of Business & Home Safety, 25% of small businesses fail to re-open following a major disaster. Factor into that gloomy statistic the lack of funds to finance a disaster relief effort and you appreciate our luck so far this season.