Category Archives: Disaster Preparedness

Storm Risk Reaches Well Beyond Tornado Alley

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We’ve heard it over and over again: 2011 was the costliest year on record for natural disasters. From triple-digit heat waves and devastating drought to overflowing rivers and deadly tornadoes, the U.S. rang up natural disaster costs in the billions and much time and effort of rebuilding.

But what wasn’t talked about so much was the fact that much of the tornado risk was located outside of the traditionally storm prone tornado alley, according to a new report by CoreLogic. “The apparent increase in the number of incidents and shift in geographic distribution of losses that occurred last year in the U.S. called the long-held notion of risk concentration in Tornado Alley into question, and is leading to changes in risk management policy and procedure,” said Dr. Howard Botts, vice president and director of database development for CoreLogic Spatial Solutions.

CoreLogic’s “Tornado and Hail Risk Beyond Tornado Alley” report analyzes hazard risk at the state-level across the U.S using the company’s wind and hail data layers. Key findings include:

  • Tornado risk actually extends across most of the eastern half of the U.S. rather than being confined to the Midwest
  • According to data from the National Oceanic and Atmospheric Association (NOAA), of the top ten states with the highest number of tornado touchdowns between 1980 and 2009, only three actually fell within Tornado Alley
  •  At least 26 states have some area facing extreme tornado risk
  • At least 11 states have significant areas facing extreme hail risk, and almost every state east of the Rocky Mountains has some area facing a moderate or higher level of hail risk
  • The area of highest hail risk extends outward from the central Great Plains to include states as far east as Georgia and the Carolinas

These findings have obvious insurance implications, but it goes beyond that to disaster preparation and natural catastrophe risk management in areas not historically prone to such events. CoreLogic released the maps below, indicating tornado peril in non-tornado alley states.

Insurers and residents alike should be aware of the high risk of tornadoes, wind and hail in these areas. For the complete report, including and in-depth descprition of how CoreLogic created the above maps, click here.

Property Insurance and Disaster Recovery

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How well a company can recover from a disaster often hinges on the quality of the recovery plan. And as Joshua Gold and Lawrence Bartelemucci of Anderson Kill & Olick point out in a new article, this plan needs to be in place before a disaster strikes. In order to develop the most effective plan, certain key considerations, both from an insurance perspective and a property perspective, must be addressed. Developing a checklist of these items can make all the difference. For example:

  • Is your space worth rehabilitating? If it is, then your company will need to contract for design and construction services to rehabilitate the current space or rebuild on site. If the space that will be rehabilitated is leased, your company needs to coordinate its efforts with the landlord.
  • If it is not worth rehabilitating, then your company must consider how it will dispose of the space (for example, selling the property or cancelling the lease), and how it will acquire new permanent space. In addition, your company will need to contract for design and construction services for its new space. This process should involve a zoning analysis to ensure that your company can build what it needs and conduct its operations on the chosen site.

For more insight, be sure to check out their article, only on RMmagazine.com.

How Visa Safeguards Its Operations

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This month, Fast Company featured a great story on how Visa protects its data. As you may remember, a payment processor partner of Visa, Heartland Payment Systems, got the whole sector in trouble when hackers infiltrated its system and exposed the financial data of well over 100 million credit and debit cardholders. At the time, it was the largest data breach in history.

And given the sensitivity of the info, it was a wake-up call for the entire industry.

Not that most have lagged on data protection. As Visa’s global systems head Rick Knight states, its whole business is tied to protecting its operations. “Most people think of us as a financial institution, but the network is the brand. If it goes down, lives are on the line.”

The whole article, which is a “rare” look behind curtain of the credit card giant’s “top secret” security center, is worth reading. But what really caught my eye was the side piece on a few of the most quirky scenarios Visa has prepared for. It’s both fascinating and a great reminder that there are a lot disaster that your company could probably be planning for.

That Anthrax plan is genius.

1. Out-of-control backhoes!
Four conduits bring electricity into the building, so if a nearby backhoe takes out one, the Visa network will keep humming.

2. Electric surges!
Every pod has two rooms with uninterruptible power supplies to condition the power coming in and make sure there are no system-threatening surges.

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3. Total blackouts! 
Each pod has two rooms with 1,000 heavy-duty batteries each, enough to turn the pod into the world’s largest laptop computer for 30 minutes.

4. Natural disasters!
Each pod has two massive diesel generators, capable of generating 4 megawatts of power.

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They had to be heavily soundproofed– including 3-foot-wide mufflers–so they wouldn’t violate county noise regulations.

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5. Anthrax copycats!
Visa’s [operations center] has no mail room. Mail goes to a modular building nearby. That way, if a suspicious powder arrives, the mail room can just be airlifted away.

Climate Change Causes Some Extreme Weather Events: United Nations

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Climate change and the risk it poses to businesses and communities has been in the headlines this week, including one article by Reuters analyst Gerard Wynn that claims “rising temperatures are driving more frequent bouts of extreme weather,” some of which we saw this year. While Wynn and others (such as myself) are in agreement that climate change is behind some extreme weather events, others continue to staunchly deny such links.

In his article, Wynn references the fact that global carbon emissions rose by a record amount last year (6%), making it the biggest one-year jump in history and proving that even though the world economy may be in tatters, ozone-depleting gasses continue to be emitted at an alarming rate. And, according to statements issued today by the Intergovernmental Panel on Climate Change (IPCC), “It is virtually certain that increases in the frequency and magnitude of warm daily temperature extremes and decreases in cold extremes will occur in the 21st century on the global scale. It is likely that the frequency of heavy precipitation or the proportion of total rainfall from heavy falls will increase in the 21st century over many areas of the globe.”

The report, which the IPCC said was a scientific foundation for sound decisions on infrastructure, urban development, public health and insurance, also states that there are many options for decreasing risk, with the best options providing solutions across a wide range of possible levels of climate change.

But this is just the most recent of string of reports suggesting that human-induced climate change is linked to some severe weather events. For business to continue to prosper within the world economy, adopting a greener way of business is the only way to decrease the risk of future extreme weather events affecting organizations and society in general.

Though the Kyoto Protocol has striven to be a catalayst of global change, the United States (the world’s number two carbon emitter) is still in stubborn denial of the need to adopt such carbon-cutting measures. To that end, China, the world’s biggest carbon emitter, plans to nudge the U.S. towards more action at a South African summit later this month. Expectations, however, are low.

As the Associated Press reported today:

Top international climate scientists and disaster experts meeting in Africa had a sharp message Friday for the world’s political leaders: Get ready for more dangerous and “unprecedented extreme weather” caused by global warming.

Making preparations, they say, will save lives and money.

These experts fear that without preparedness, crazy weather extremes may overwhelm some locations, making some places unlivable.

As a climate deal is unlikely soon and emissions continue to grow, the future is grim.