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Businesses should lead disaster resiliency nationwide

Businesses should lead disaster resiliency nationwide

Predicting the weather is a job best left to the professionals, but being prepared for the next storm, wildfire or extreme temperatures can be part of everyone's responsibility. The business community has a unique opportunity to be a linchpin in the nation's resilience against the uncertain challenges accompanying severe weather threats, says Julie Rochman, president and CEO of the Insurance Institute for Business & Home Safety.

Across the country and around the world, severe and unpredictable weather has made “resilience” a more urgent topic for insurers, governments, businesses and residents. While many seek explanations for unusual and extreme weather events, the best course of action for those of us not in the climate science field is to identify and advocate effective adaptation solutions to better protect our communities against Mother Nature's fury, both now and in the future.

While there are always fluctuations in severe weather and its consequences, aggregated losses during the past two decades have been immense. From 1993 to 2012, insured catastrophe losses in the United States totaled $391.7 billion, an average of almost $20 billion per year. Last year was actually one of the least extreme weather years in memory, although a number of significant events occurred that caused substantial property damage and business disruption across all regions of the country.

The first half of 2014 produced severe winter weather that froze pipes, as well as parts of the U.S. economy; destructive tornadoes that killed dozens of people, and damaged homes and businesses in the South Central and Southeast states; and more than twice the average number of wildfires in California and elsewhere. Now, we are in the heart of the Atlantic hurricane season; even though predictions are for a relatively calm season, it only takes one storm making landfall to do substantial damage along the Atlantic and Gulf coasts. And then there is Hawaii, where two historically uncommon tropical storms recently reminded residents that they, too, are vulnerable to hurricanes.

Insurers know too well that disaster losses also have risen due to population shifts and increased density and value of property in vulnerable areas — particularly those at risk from coastal threats and wildfires. For example, coastal counties along the Gulf of Mexico and the Atlantic seaboard make up only 3% of U.S. landmass, yet they account for about 15% of the population. Meanwhile, Wildland-Urban Interface areas accounted for nearly 60% of new construction during the most recent period studied by the U.S. Department of Agriculture's U.S. Forest Service.

The Federal Reserve Bank of New York conducted a study last year to understand the issues facing communities and businesses in the Superstorm Sandy-affected region. One year after Sandy, nine in 10 businesses surveyed reported persistent financial problems covering operating expenses or repositioning their business.

This study illustrates long-term effects of severe weather on businesses that are not prepared for disasters. As corporate citizens, businesses from Main Street to Wall Street have an important role to play in community resilience. The level of preparedness of the business sector is inextricably linked to a community's economy and vitality as it recovers from an extreme event.

Part of this responsibility includes business continuity planning. Both property loss mitigation efforts to prevent structural damage and operational measures to restore critical business operations are critical elements in the process. There are numerous tools available to help businesses identify the hazards they face, protect their assets and investments, income and revenue, systems and technologies, and reputation and competitiveness.

An important corporate responsibility is to continue providing goods, services and jobs following a disaster. However, to achieve the larger goal of true community resilience, businesses must reach beyond their walls and take a holistic approach to disaster planning.

Damage from natural disasters is likely to affect homes of employees and community infrastructure, in addition to businesses. Ideally, workers should not have to make impossible choices between fulfilling their employment responsibilities and taking care of personal obligations related to recovery in days or weeks following an extreme event.

One way for businesses to avoid downtime is to help assure their employees are living in homes that can survive hazards posing the greatest threats to their communities. This can reduce the likelihood employees will be distracted from performing job functions because they must focus on their own recovery, or relocate if their homes are destroyed. Employers also should encourage employees to create and maintain a disaster supply kit in their homes and develop a family emergency communications plan.

In addition to concerns about employees' homes, if local schools are closed, roads are impassable or power is out for a long time, employees and customers may be stranded or preoccupied with non-work-related recovery concerns. So it makes sense for businesses to participate in planning and zoning activities to help assure disaster resistance is considered in the construction and maintenance of community infrastructure such as roads, schools, electrical systems and hospitals.

While much of the responsibility for community infrastructure lies with government, experience from a wide range of events makes it clear that participation by the private sector can help in the planning process, since businesses can add management expertise, financial aptitude and logistical know-how.

Following a natural disaster, businesses can play an important role in disaster relief, particularly if they have been fortunate enough to escape major damage. Such demonstrations of community support are an effective way for businesses to show leadership and underscore their reputation for service excellence. This can be accomplished by involving employees in a community-based disaster assistance volunteer force, or providing economic aid or services. Following a disaster, the need for essential products and services will be high, providing an important role for businesses that are prepared.

The business community also has an opportunity following a disaster to participate in local long-term recovery and rebuilding discussions, and ensure that communitywide resilience is given high priority.

Although recovery and rebuilding can be overlooked given the pressing need to repair damage and restore basic services, the best time to change perceptions and politics about disaster planning is when memories of the damage and dislocation are fresh. This collective recognition can turn the crisis into an opportunity that will result in a more resilient and disaster-resistant community.

By taking necessary actions to become better prepared, communities and businesses can become more resilient and better able to protect residents and maintain critical business infrastructure when disasters strike.

Julie Rochman is president and CEO of the Insurance Institute for Business & Home Safety in Tampa, Florida. She can be reached at 813-675-1044 and

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