Natural Disaster Business Costs: First-Half Losses Make 2011 Costliest
Munich Re: First-Half Losses Make 2011 Costliest for Natural Disasters
The accumulation of 100 natural disasters in the United States produced an excess of $18 billion (and climbing) insured losses in the first half of 2011 alone. The global distribution of natural loss events, including the 9.0-magnitude earthquake in Japan, along with the resultant tsunami; the earthquake and flooding in New Zealand; and the tornadoes and flooding in the U.S., has already made 2011 the costliest year for natural disasters on record. Economist Dr. Robert P. Hartwig cited a “sense of rewriting the economics of the history of disaster in the U.S. and on the global scale.”
Natural Disaster Business Costs
Analysis by Jim Satterfield, COO Firestorm Solutions:
Disaster costs in the U.S. this year are already 80 percent above normal with more than five months remaining and impacts just beginning to be tabulated. These increase does not take into account the billions uninsured or under-insured. This year has the potential — with hurricanes or earthquakes still to come — to set new records, and not the good kind.
Current Plan Adjustment
How have you adjusted your plan based upon this year’s increase in frequency and severity of disasters?
In sports, we start out with a game plan. In business, we have a business continuity plan. In a game, as our opponent makes progress or changes their tactic, we adjust to win the game.
Recognizing that things have changed in a game is easy. We look at the scoreboard or statistics. What do you look at to update your business continuity plan? Are your original assumptions still valid? Have new risks emerged or are they emerging? What are you monitoring?
Plans should not be static. If they are, then the likelihood is that you will have to explain what happened and why you were not prepared. Explaining means you are losing. Your recovery plans may remain valid or adaptable. What could you have done to decrease impacts? To provide more time or create a buffer?