Napa Valley Damages Could Top 1 Billion

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Early in the morning on August 24, a 6.0 earthquake rocked the wine country of Napa Valley, California. Residents and business owners of the historic area experienced the strongest earthquake to hit California’s Bay area in almost 25 years. The earthquake caused structural damages to public and private buildings, as well as caused several main highway and road closures.earthquake 2

The effects were felt as far south as Santa Cruz and into central Contra Costa County. Buildings shook in San Francisco, nearly 40 miles from the epicenter. Close to 50 aftershocks registered the following day. The U.S. Geological Survey (USGS) predicted a 45 percent likelihood of a magnitude 5 or larger for the following seven days. As of Tuesday, September 2, more than 120 aftershocks reaching 3.9 on the Richter Scale were felt throughout the region.

The quake injured more than 200 people and caused damage to dozens of buildings in the community northeast of San Francisco. After declaring a state of emergency, California Governor, Edmund Brown, reported nearly 69,000 Pacific Gas & Electric customers were without power.

Downtown Napa endured heavy damages to several historical buildings including the county courthouse and the Goodman Library. Sixteen buildings in the downtown region were “red tagged” or deemed uninhabitable by city officials.

Damages to Businesses

The grape-harvesting season had just began as the quake hit. Providing thousands of jobs in the area, Napa County is a significant wine-producing region. Local officials estimated property damages could reach $1 billion.

CoreLogic Eqecat, a company that determines economic losses after disasters, estimated insured losses due to the quake could range from $500 million to $1 billion. Wineries have started the process of harvesting and crushing their grapes and storing the juice. The company explained had that process not started, losses would have been lower.

Damages, however, were not detrimental to the Valley’s business income according to Clay Gregory, president of the tourism organization, Visit Napa Valley. “Clearly, we are concerned that people are going to see that it was a catastrophe, and it certainly wasn’t good, but it wasn’t a catastrophe by any means.” He continued to state that “the real story is that it has impacted a very small part of the valley.”

earthquake wineGregory suggested that travelers visiting the area call first and confirm plans as most businesses were open as usual.

According to Napa County Supervisor Bill Dodd, 80 percent of the valley’s 500 or so wineries were unaffected. If people “think Napa is devastated, it’s anything but devastated. We’re only 24 hours out from an earthquake, and we’re on our way back,” Dodd stated.

Public events scheduled for that day continued as planned despite the earthquake.

Snapshot of Business Income

The bulk of Napa Valley’s business economy comes from tourists visiting wineries. Visit Napa Valley estimated that 3 million tourists spend $1.4 billion a year visiting the area. Over 46,000 local jobs and $13 billion of economic activity are generated each year by the industry.

Despite the damages created by the quake, tourists are still eager to tour the vineyards. The Holiday Inn Express, near American Canyon and closer to the epicenter, remained 90 percent booked with only 10 cancellations.

Other businesses are less lucky, with “red tag” notices that force their closures indefinitely. By most media reports, the most-damaged structure in the city is the historic building that houses the Carpe Diem Wine Bar and restaurant: The earthquake completely collapsed part of its second floor, sending debris onto the sidewalk below. Further outside Napa, a historic building owned by Trefethen Family Vineyards suffered what owners described on the winery website as “major damage”: Photos and aerial video reveal the tasting room is now leaning slightly to one side, and engineers are currently working to determine whether or not it can be restored. If not, it would mean the loss of a building on the National Register of Historic Places.

Calculating economic loss from earthquakes is a lengthy and unpredictable process. Acknowledging that uncertainty, the United States Geological Survey (USGS) reports a wide range of estimated economic losses, as it does after every earthquake. According to the latest version of its alert, issued last Tuesday morning, the USGS says there is a 3-in-5 chance that losses will top $1 billion and a 1-in-4 chance that losses will top $10 billion.

Preparing for the future

The BookThe California Office of Emergency Service encouraged residents to prepare for future disasters:

“Families should understand what disaster risks exist where they live, work, and play; work to create a family emergency plan; and build an emergency kit with enough food, water, and supplies to sustain every member of your household (including pets) for a minimum of 72 hours.”

Firestorm Recommendations

For companies in natural disaster prone areas – and for any company – a formal risk assessment is needed to properly understand a company’s risks and how those risks could be better addressed through additional controls.

Knowing the threats your company faces will enable the organization to manage the results, and respond effectively. The analysis also results in the identification of specific enhancements for: leadership requirements, decision processes, command and control operations, emergency response, employee procedures, streamlined communication techniques and facility/equipment upgrades.

Firestorm’s process determines the risks (events or surroundings) that can adversely affect the organization and its resources (examples include: people, facilities, technologies) due to business interruption. The process will also determine the potential loss such events can cause, and the controls needed to avoid or mitigate the effects of those risks.

Firestorm’s risk assessment evaluates the threats that are specific to your organization and environment. The evaluation of threats will include natural/biological hazards and technological/human-induced hazards. For natural threats, historical data concerning frequency of occurrence for given natural disasters such as tornadoes, hurricanes, floods, fire, or earthquakes is used to determine the credibility of the given threat.Using this information, an overall risk ranking will then be assigned to each type of threat. The overall risk rating is a subjective rating that considers each threat’s severity, likelihood, and controls, and supports ‘s ability to prioritize threats and identify risk control measures.

  • Previous incidents are analyzed and potential threats or events identified, beginning with the obvious, and working toward the less likely.
  • A hazard vulnerability analysis tool (Hazard Impact Matrix) is used to evaluate your company’s level of preparedness.
  • Risk factors are categorized as to their disruption to the company in high, moderate, or low classification.
  • Human, property, and business impacts is evaluated and ranked from negligible to severe.
  • Prioritization of hazards is used to evaluate and determine a score below which no action is necessary.
  • The most effective triggers are identified in order to have an efficient and effective response to an incident, should one occur.’

It is also essential to prepare for a disaster at home. The safety of family and loved ones is the first and foremost concern while planning for a crisis. Once the plan is created, however, focus should be shifted to business readiness.

Every crisis is a human crisis. Make sure you’re prepared to handle any situation. Learn more by downloading our free book, Disaster Ready People for a Disaster Ready America, or by contacting us here.

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