In the last year, there have been 17 natural disasters incurring more than $1 billion dollars in damages. According to experts hosted by The Risk Institute this week at an event on building business resilience to climate change, pre-planning and risk improvement can make a huge difference in loss mitigation.
Scott Anderson, a vice president at FM Global outlined numerous strategies that a company could take on in order to mitigate their risk in the event of a catastrophic weather event. These strategies were much more comprehensive than typical human interventions like sandbags; they are what he called physical flood mitigation — installing metal blockades, floodgates/barriers, etc.
This is much more than fear-mongering, these physical mitigations are scientifically proven to be more effective than human intervention. Take the massive flooding due to a hurricane or stalled rainstorm like Hurricane Harvey in 2017, which dumped nearly 60” of rain in just four days in the Houston area. FM Global clients who had made the recommended mitigations to their facilities only suffered a distraction, rather than devastation during the storm. In contrast, those clients who did not, incurred on average $23 million in damages from physical destruction, as well as in lost revenue.
Can your business afford a $23 million loss?
To illustrate an example of supply chain resiliency, Danielle Virant and Lee Ettenhofer from Abbott Nutrition shared their experience of leading the company through a table-top crisis exercise, which was then able to be acted on during Hurricane Harvey in order to ensure that hospitals — and in one case an immunocompromised baby girl — received the life-saving products they needed.
The key takeaway from their experience with the exercise and the actual emergency is that a plan is only as good as it is current, available, and in writing.
“Institutional knowledge is great, but it’s not so great with that knowledge retires without writing it down first,” said Virant.
Their advice is to set a date on the calendar every year to pull out the plan, review it, and make any changes that way it stays current and can quickly be applied if and when the need arises.
Kirk Pasich, an outstanding L.A. based litigator, shared some fascinating insights on the importance of contract language between the insurer and the insured, saying, “They [the insurer] is nearly always going to win— at least before you call me — when there is vague wording in a contract.”
Proving yet again, that specificity of language is much more important than your 10th-grade self ever thought it would be.