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ARC: ATTAINING RISK MANAGEMENT NIRVANA

Superstorm Sandy spurs cities' catastrophe risk mitigation efforts

New York, Boston officials strive to fortify cities against natural disasters

Superstorm Sandy
Photo by AP PHOTO A tattered American flag waves in front of a home being built this month in the Breezy Point neighborhood of Queens. Many homes in the area burned down after Sandy.

A year after Superstorm Sandy pounded the Northeast, political, business and public policy leaders agree they need to work together to protect the region, but differ sharply on how to address the risks of similar powerful storms.

In addition to the devastation caused by Sandy — $18.75 billion in insured losses and $65 billion in damage and economic losses — the storm was a watershed event raising awareness that such a natural disaster could indeed strike again in the same area.

“From our perspective, there seems to be an awareness of the need to change” how the public and private sectors prepare for extreme weather, said Tom Varney, Chicago-based head of risk consulting for Allianz Global Corporate & Specialty.

“What I would say has really changed since Sandy is much more coordination between agencies at all levels,” said Vivien Li, president of the Boston Harbor Association. “It's really broken down the silos.”

While silos may be coming down, opinions differ on how best to protect vulnerable East Coast cities saturated by Sandy last October. New York is a prime example of these differences, said Malcolm Bowman, professor of physical oceanography and a Distinguished Service Professor at the Marine Sciences Research Center of the State University of New York at Stony Brook.

Mr. Bowman, a member of New York Mayor Michael Bloomberg's panel on climate change, cited differences in the approach Mr. Bloomberg supports and proposals promoted by New York Gov. Andrew M. Cuomo's administration.

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“From the very first day that Sandy hit, (Mr. Bloomberg) declared that a European-style storm surge protection system was not in the cards,” Mr. Bowman said. The mayor, he said, saw such multibillion dollar physical protections as too expensive and unable to protect all exposed property and infrastructure. “So the new term was resiliency,” Mr. Bowman said.

Mr. Bloomberg's “A Stronger, More Resilient New York” report released in June included more than 400 pages of recommendations to rebuild neighborhoods affected by Sandy and increase the resilience of the entire city's infrastructure and buildings.

At the state level, a commission created by Gov. Cuomo has called for a series of measures, ranging from “soft” protections such as turning some shoreline areas back into oyster beds, to a storm-surge barrier with movable gates across the Narrows, the strait between Staten Island and Brooklyn. That barrier could cost up to $20 billion alone, officials said.

Mr. Bowman sees the need for some European-style systems to protect New York. He cited the Thames River Barrier in England and the Delta Works system in the Netherlands, both built following a catastrophic 1953 storm, as well as current Italian efforts to protect Venice.

“The most interesting one to me is in St. Petersburg, Russia,” Mr. Bowman said. There, a giant seawall around the city protects it from storm surge on the Neva River delta; it includes a series of dams around the city topped by a highway with openings that allow ships to pass through, and gates that can be closed to protect against storm surge.

Mark Way, head of sustainability for the Americas at Swiss Re Ltd. in Armonk, N.Y., said a Netherlands-style system is designed to protect a 1-in-10,000-year disaster. “Building that kind of a system into an area like New York is rather unrealistic.”

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“At the end of the day, all of these things are tradeoffs,” weighing protection vs. cost, Mr. Way said. “It comes down to the local community making a decision.”

“There's no right answer,” said Andy Castaldi, head of catastrophe perils for the Americas at Swiss Re in Armonk. “There's going to be different people with different viewpoints. If we could at least slow down the trend toward larger losses, I think that would be a major win.”

In its 64-page report, the Washington-based Urban Land Institute made several recommendations intended to advance long-term strategies for resilience and adaptability in coastal areas.

The recommendations include regional coordination between the federal government and the various states and New York city government, said John L. McIlwain, a senior resident fellow at the institute. To that end, the organization recommended reconstituting the Hurricane Sandy Rebuilding Task Force initially established by President Barack Obama to aid Sandy recovery efforts.

The institute also recommended that flood insurance premiums be set at a price that accurately reflects the risk.

“Long-term we need to go to a full market price for all insurance,” Mr. McIlwain said, though both federal and private flood insurance should adjust premiums to reflect risk-mitigation efforts.

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Such risk-based insurance pricing also provides “the best signal to someone whether they're building responsibly or irresponsibly” for the area's risk profile, Swiss Re's Mr. Castaldi said.

The institute's recommendations have “pretty much dismissed the notion of a seawall across the Narrows,” Mr. McIlwain said.

The Boston Harbor Association's Ms. Li said that since Sandy, she sees the sort of multijurisdictional cooperation the institute recommends occurring in efforts to determine how the Boston area should address storm risk.

Different agencies are “working together on a regular basis,” she said. “People really share. They know they're vulnerable.”

In addition to Boston's efforts to understand and plan for storm risks, the Massachusetts Department of Transportation received a federal grant earlier this year to study the potential effect of storm surge on Boston's Central Artery Tunnel road system, otherwise known as the Big Dig, Ms. Li said.

And a long-term strategic plan being developed over the next year by the Massachusetts Port Authority will include a focus on protecting Boston Logan International Airport, the Port of Boston and waterfront property against sea level rise, storm surge and future Sandy-like weather events.

Allianz's Mr. Varney said he thinks it's valuable for businesses to work with various governmental entities, as they plan to prepare for future storms. Understanding government jurisdictions' capabilities can help businesses determine their own risk-mitigation needs, he said.

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Sandy's effects have been felt beyond the Northeast, as it was a significant factor leading to a global partnership announced in September to assist at least 100 cities around the world to hire a chief resilience officer and develop a disaster resilience strategy.

The Rockefeller Foundation, which is leading the effort, has pledged $100 million to the project. Swiss Re, the American Institute of Architects, the Architecture for Humanity charitable organization, and computer software and services firm Palantir Technologies Inc. are partners in the project.

Going forward, a key is gathering the best information available and assessing catastrophe risk management scenarios for a range of possible outcomes, said Swiss Re's Mr. Way. As bad as Sandy was, a future storm could cause more damage in the Northeast, his colleague Mr. Castaldi said.

“Sandy was devastating and I do not mean to diminish that,” Mr. Castaldi said, “but it was far from a worst-case event.”

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