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Flood, Wind Dominant Natural Hazards in 2016

While most natural hazards occurring in the United States last year saw average or below average activity, the exceptions were flood and wind, according to the CoreLogic report Natural Hazard Risk Summary and Analysis, released today.

Severe flood events driven by substantial rainfall were the dominant natural hazards, with Louisiana and North Carolina floods being the major loss contributors. As in 2015, hurricanes and tropical storms in 2016 continued to cause inland flooding through increased and intense rainfall—even when not making landfall, according to the report.

The National Oceanic and Atmospheric Administration (NOAA) said there were 12 individual weather and climate disaster events in the U.S. with losses exceeding $1 billion in 2016.

According to the report:

  • Based on NOAA and CoreLogic analysis, the overall flood loss in 2016, driven by six, 1,000-year plus rain events, was approximately $17 billion, which is six times greater than the overall flood damage experienced in 2015.
  • The U.S. Geological Survey (USGS) recorded 943 earthquakes of magnitude 3.0 or greater in 2016, with more than 60 percent of these earthquakes located in Oklahoma.
  • The National Interagency Fire Center (NIFC) reported a total of 5,415,121 acres burned from 62,864 separate fires in 2016.
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    While the total acres burned in 2016 fell below the 10-year average, significant losses occurred, with thousands of homes in California and Tennessee destroyed by several smaller fires that burned in populated areas.

  • Wind activity in 2016 was slightly above average, due in large part to strong winds brought by Hurricane Matthew.
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  • Hail activity in 2016 was near the average, and Texas experienced the worst of this natural hazard.
  • Tornado activity in 2016 was near average compared with previous years.
  • Hurricane Matthew developed late in the year and grew to a Category 5 storm, resulting in substantial damage along the southeastern seaboard.
  • There were below-average levels of tropical cyclone activity in the western North Pacific Basin encompassing East and Southeast Asia in 2016.

However, 2016 became known as the year without a winter. Nine winter storms impacted the U.S. in 2016, the most notable being the late-January winter storm in New York.

“History has continually shown us that it is impossible to determine exactly when or where the next wildfire, flood or earthquake will strike, which is why preparedness, response and post-loss assessment are paramount,” CoreLogic said.

Act Now to Prevent Frozen Water Pipes

Freezing weather can bring the unexpected, from slippery sidewalks and ice dams to one of the most common problems—frozen water pipes. Knowing what conditions can cause pipes to freeze is the first step to prevention. If pipes do freeze, a quick response can keep them from bursting, avoiding the expense of replacement, possible water damage to walls, floors and electrical systems, or even a business shutdown.

According to the Insurance Institute for Business & Home Safety (IBHS), 37% of all frozen pipe failures occur in a structure’s basement. What’s more, pipe insulation to keep water pipes from freezing in the first place costs much less than the price of repairs.

IBHS recommends these prevention steps for businesses:
pipes-ibhs

Interstate notes that pipes are most likely to freeze in Connecticut, Maryland, New York, Ohio and Pennsylvania and that a 1/8 inch crack can cause the loss of 250 gallons of water per day and damages from $2,000 to $100,000.

According to Interstate:
frozen-pipes1

If pipes freeze, Interstate recommends:
Do:

  • Turn off the water flow using the main water valve
  • Inspect the pipe carefully for cracks or damage
  • Consult a plumber for advice, if you find cracks or signs of damage (also be sure to consult a professional if you aren’t sure which pipe is frozen and/or you are unable to inspect it)
  • Thaw the pipe gradually using a hair dryer or space heater
  • Confirm the pipe has thawed by turning the main water valve back on and making sure that water flows
  • Take steps to raise the temperature in the area where the pipe froze or insulate the pipe

Don’t:

  • Use a blow torch or open flame to thaw a frozen pipe – open heat sources can cause fires and other safety hazards
  • Stand in water while you are operating an electrical heater, dryer or any appliance—you could be electrocuted

Moving Employees Safely is Critical in Oil & Gas Industry

oil-rigs
The oil, gas and marine industry has always teetered on the brink of unfortunate circumstances. Oil rigs and oil tankers, by the very nature of their massive size and exposure to the elements, are susceptible to myriad dangers. And when those risks materialize, the safety of the men and women operating these maritime behemoths must take top priority.

In the case of a hurricane, energy giant Shell Oil says it begins evacuating non-essential personnel from offshore platforms and drilling rigs, starting with sites closest to the hurricane’s anticipated path. Like Shell, most of the larger oil companies have evacuation down to a science, particularly during hurricane season. In many cases the evacuation from oil rigs or oil tankers is highly manageable, with no more than a few dozen people having to be transported at times. Thus, in most cases, the evacuees can simply grab a taxi, book themselves into a hotel room, or make other similar accommodations.

But what happens when the evacuation is so immense that you are suddenly relocating thousands of workers to the nearest mainland?

In October 2014, with the threat of a cyclone ready to batter the Gulf of Mexico, Mexico’s state oil company, Pemex, evacuated 15,000 workers from more than 60 platforms in the Gulf of Mexico—all with the need to be transported and lodged.

Anticipating worst case scenarios is a prerequisite. Although travel by executives at the C-suite level in these types of companies is handled with the highest priority, to deal with the constant movement of lower-level workers, many companies enlist the services of travel management companies to coordinate getting personnel from land to rigs, tankers, drills and pipelines and back. This massive orchestration includes coordinating accommodations, lodging, weather alerts, translation services and other types of ticketing.

Certain industries, such as oil and gas, need to send employees to work in the world’s “hot zones.” According to a USA Today report, three Americans were among 38 workers killed in the 2013 siege of an Algerian gas plant in which Islamic terrorists used hostages as human shields after their attempted mass kidnapping for ransom went awry. Seven U.S. citizens survived the attack. This illustrates that the need to move crews swiftly isn’t always at the mercy of weather conditions. This is where a real-time knowledge of the current political climate is necessary, including the best exit points, and how to travel safely within those countries should the need to evacuate a facility arise.

Other times the challenge includes getting workers from a major airport to a remote location—perhaps where a helicopter undertakes the last leg of the trip out to the site. Oil and gas industry travelers also need to realize that the flight on a major airline to get into a somewhat unstable country isn’t the problem; it’s traveling within the country, where options are often very limited.

Fortunately, the recent boom in technology has helped make personnel travel safer, as they can now receive electronic alerts regarding risks such as natural catastrophes, labor strikes, and changes in flight schedules.

There is the potential for a number of problems to arise when operating these marine locations, both weather-related and man-made. And the cost of finding solutions to these situations can often be crippling and costly to a business, both in terms of valuable staff time wasted as well as the difficulty in finding the time or the resources to source viable, inexpensive travel alternatives.

Lloyd’s Finds Extreme Weather Can Be Accurately Modeled Independently

In a new report based on research from UK national weather service the Met Office, Lloyd’s has found that extreme weather events may be modeled independently. While extreme weather can be related to events within a region, these perils are not significant correlated with perils in other regions of the world.

The study’s key findings include:

  • Met Office research found that the majority of perils are not significantly correlated, but identified nine noteworthy peril-to-peril teleconnections, most of which are negatively correlated
  • Lloyds’ modeling finds that these correlations were not substantial enough to warrant changes to the amount of capital it holds to cover extreme weather claims
  • Even when there is some correlation between weather patterns, it does not necessarily follow that there will be large insurance losses. Extreme weather events may still occur simultaneously even if there is no link between them
  • An assumption of independence for capital-holding purposes is therefore appropriate for the key risks the Lloyd’s market currently insures
  • The methodology released in the report enables scenario modeling across global portfolios for appropriate region-perils

“This important finding supports the broader argument that the global reinsurance industry’s practice of pooling risks in multiple regions is capital efficient and that modeling appropriate region perils as independent is reasonable,” the report concluded.

According to Trevor Maynard, head of exposure management and reinsurance at Lloyd’s, “This challenges the increasingly held view among some regulators around the world that capital for local risks should be held in their own jurisdictions. Lloyd’s believes this approach reduces the capital efficiency of the (re)insurance market by ignoring the diversification benefits provided by writing different risks in different locations and, in so doing, needlessly increases costs, to the ultimate detriment of policyholders. Insisting on the fragmentation of capital is not in the best interests of policyholders.”

Check out the map below for further insight from the Met Office about large-scale weather perils that do demonstrate statistically significant correlation:

lloyd's extreme weather perils