Category Archives: Disaster Preparedness

The 5 Safest Places on Earth

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Security is a critical component of risk management. If company employees and assets are not considered safe and sound, little else matters. Some locations take protection to the extreme, however.

Of course, many military facilities are incredibly hardened, of course, but there are a handful of other quirkier institutions (as well as one world-famous bank) that virtually guarantee their people and property are secure — both from manmade and natural threats.

Here is a list of those five safest places on earth.

5. Istanbul’s Earthquake-Safe Airport

2010 has been the year of the earthquake. The decade began with the devastating quake in Haiti that killed hundreds of thousands. Soon after, seismic activity in Chile, China, Mexicali and New Zealand rocked all regions of the globe.

If we can learn from an earthquake-proof airport in Istanbul, however, perhaps future quakes will be much less damaging than they have been throughout history.

The world’s largest seismically isolated building, the new international terminal at Istanbul’s Sabiha Gökçen Airport, is now complete and open for business.

Stretching across more than 2 million square feet, the terminal doesn’t sit directly on the soil, but rather on more than 300 isolators, bearings that can move side-to-side during an earthquake. The whole building moves as a single unit, which prevents damage from uneven forces acting on the structure.

Given that a massive, 7.4-magnitude temblor struck Turkey in 1999, killing some 17,000 and destroying billions of dollars worth of property, this seems like a great development in a city that geologists expect to see another major quake within the next few decades.

4. Bahnhof’s Underground Data Center

Swedish internet service provider Bahnhof set out to find a safe place for its data. For them, an old nuclear bomb shelter 100 feet below a mountain in Stockholm seemed safe enough. And its not just the ISP that thinks so.

The infamous Wikileaks has also moved some of its servers to the bunker that was built in 1943 and renovated in the 1970s to house governmental officials should catastrophe strike.

Apparently, the Bahnhof people are pretty happy to host Wikileaks in their ultra-secure bunker, safe from any political pressure and physical assaults. Wikileaks is under attack by the US government for the publications of many of its secrets. Most recently, Wikileaks released 100,000 internal military documents from the Afghanistan war.

Wikileaks has since unveiled a trove of documents on the current war in Iraq. Neither the company nor its founder, Julian Assange, are making any friend in the Department of Defense, but failing a full military assault on their servers, Wikileaks can at least rest assured that its computers are safe.

3. The Terror-Proof 7 World Trade Center

Along with the Two Towers, the nearby 7 World Trade Center building was also destroyed on 9/11. Unlike the larger structures, however, this one has been rebuilt. It maintains the original name, but when it comes to protection, this one will not be destroyed.

It has been hailed as the safest building in the world, its 52-stories of glass elegance belying a concrete core built to be a bunker in the sky. It is the first skyscraper to be completed at the World Trade Center site, and as it approaches its second anniversary, its innovative architecture and endlessly redundant security features – most of them designed from the lessons of the Twin Towers catastrophic collapse – offer a template for high-rise buildings in a post-9/11 world.

“The biggest change in high-rise construction now is this sealed, hardened core,” says Dr. Herb Hauser, president of New York-based Midtown Technologies, a firm that specializes in security technologies for buildings. “This means that the structure around the core can go down, or be on fire, or be invested with a biological or chemical problem, but the actual core itself will be protected.”

Many other buildings are now being designed and built with the new 7 World Trade as a model.

2. The Svalsgaard Doomsday Seed Vault

Deep beneath the ice of a remote, arctic Norwegian island lies humanity’s last hope to restore agricultural production if any worst-case scenario ever happens. From climate change and nuclear winter to global pandemic and asteroid strikes, humankind has little trouble envisioning any number of catastrophes that could qualify as extinction-level events. But this seed bank now houses the genetic code for all of the critical crops we would need to reboot civilization.

How secure it is? Well, here’s what I wrote about the Svalbard seed vault a few years ago.

Physically, it is virtually impervious to disaster. Earthquakes, such as the 6.2 magnitude quake that struck nearby in February, cannot damage the underground bunker as its steel and reinforced concrete structure is even strong enough to withstand a direct nuclear strike to the mountain. Time, too, will cause minimal harm-Global Crop Diversity Trust’s executive director Cary Fowler expects the vault’s life span to rival the Great Pyramid of Giza.
The vault uses a series of electric cooling units and enormous fans to maintain its constant zero-degree temperature. In the event of mechanical failure, however, its depth below the arctic permafrost would keep the vault cold enough to ensure adequate conservation for multiple years, even presuming the most drastic climate change-related temperature increases.
Human-instigated sabotage is almost equally unlikely. The remoteness of Svalbard, a Norwegian island chain located about 600 miles from the North Pole, is one of the seed bank’s greatest safeguards. The closest community to the vault, Longyearbyen, has a population of 2,000, which easily makes the sparsely populated mining community the metropolis of the archipelago. By contrast, the islands are home to an estimated 3,000 polar bears, which if the armed security guards, steel doors, air locks and video surveillance all fail, can presumably provide a final line of defense against would-be trespassers.

Physically, it is virtually impervious to disaster. Earthquakes, such as the 6.2 magnitude quake that struck nearby in February, cannot damage the underground bunker as its steel and reinforced concrete structure is even strong enough to withstand a direct nuclear strike to the mountain. Time, too, will cause minimal harm-Global Crop Diversity Trust’s executive director Cary Fowler expects the vault’s life span to rival the Great Pyramid of Giza.

The vault uses a series of electric cooling units and enormous fans to maintain its constant zero-degree temperature. In the event of mechanical failure, however, its depth below the arctic permafrost would keep the vault cold enough to ensure adequate conservation for multiple years, even presuming the most drastic climate change-related temperature increases.

Human-instigated sabotage is almost equally unlikely. The remoteness of Svalbard, a Norwegian island chain located about 600 miles from the North Pole, is one of the seed bank’s greatest safeguards. The closest community to the vault, Longyearbyen, has a population of 2,000, which easily makes the sparsely populated mining community the metropolis of the archipelago. By contrast, the islands are home to an estimated 3,000 polar bears, which if the armed security guards, steel doors, air locks and video surveillance all fail, can presumably provide a final line of defense against would-be trespassers.

I think it’s safe to say that, no matter what, we’ll always have seeds.

1. Fort Knox

Everyone knows that Fort Knox, the colloquial name for the U.S. Bullion Depository, is where the United States houses much of its gold. But did you know that the nearly 5,000 tons of precious metal valued at some $137 billion stored there is protected by a 22-ton door? Good luck getting through that.

The vault door, which has a combination that must be entered by some 10 different staff members — none of which know anything but their part of the code, is the crown jewel of a nearly impregnable fortress. And while this is a fantastic security measure, it’s not like anyone could ever get inside the building anyway, what with the tanks, Apache helicopters, armed guards, fences, concrete-lined granite walls, video surveillance and alarms that all safeguard the facility. It’s no wonder, then, that at the height of World War II, Fort Knox stored the Magna Carta, the Crown Jewels of the United Kingdom, the gold reserves of several occupied European nations, the Declaration of Independence and the U.S. Constitution. The Gettysburg Address and the Guttenberg Bible have both reportedly been protected inside Fort Knox as well.

Proposal Would Increase Earthquake Coverage in CA

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Surprisingly, only about 12% of insured households in California currently have earthquake insurance. For such an quake-prone area, 12% is just not enough and, luckily, a new initiative may provide a sharp increase in the number of households with coverage against such catastrophes.

According to a RAND Corporation study, a proposal for the federal government to support state-run catastrophe insurance programs would increase the number of people buying earthquake coverage in California. The plan would also lower both uninsured losses and government assistance following a major quake. The four main tenents of the Catastrophe Obligation Guarantee Act (COGA) are:

  • lower insurance costs
  • more households with earthquake insurance coverage
  • decrease in uninsured losses
  • decrease in demand for federal disaster assistance

The RAND Corporation’s study estimates that lower premiums will produce a 13.2% increase in the purchase of earthquake insurance from the California Earthquake Authority, the privately-funded organization that provides earthquake insurance to the state’s residents.

“While catastrophe obligation guarantees could substantially reduce earthquake insurance costs in California, they would ultimately have a modest effect on decreasing uninsured losses and reducing the amount of disaster assistance spending.” said Tom LaTourrette, lead author of the study and a senior physical scientist with RAND, a nonprofit research organization.

So, though the study predicts an increase in the purchase of earthquake insurance, a substantial portion of earthquake losses are expected to fall below policy deductibles. Thus, an increase in coverage would translate to “less than a 1% increase” in the amount of losses that would be reimbursed. So while COGA is expected to decrease the amount of uninsured losses after a California quake, it is not a total solution. The study suggests that officials consider other avenues for increasing earthquake insurance coverage, such as public education and marketing and new, more attractive earthquake insurance products.

Groundbreaking Flood Models for Latin America

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Willis Re has introduced long-awaited flood models for Latin America through their research arm Willis Research Network (WRN). The models focused on large event scenarios for key cities such as Sao Paulo, Santiago and Bogota.

“The flood models provide South American insurance and reinsurance firms, as well as local governmental organizations, with new information that helps to identify and manage their exposure to flash floods caused by heavy rains and riverine overflow. Related results will be available for individual companies as well as the market as a whole and will have implications on planning, reinsurance and risk mitigation.”

The news was presented during the Geneva Association‘s 2nd Climate Change and Insurance meeting held in Sao Paulo last month by Dr. Juan Enlgand of Willis Re, who stated that these models might be used to consider the potential impact of climate change.

These models are greatly needed to say the least. Last year, floods and mudslides in Brazil caused 44 deaths and an estimated $1 billion in damages. In April, more than 250 died in Rio de Janeiro after torrential rains caused massive flooding and landslides. In June, more flooding in Brazil killed at least 41 and left more than 120,000 homeless. As Margo Black, CEO of Willis Re Brazil commented:

“Urban flood risk is an acute concern for Latin American re/insurers who have been challenged by growing losses and the lack of models to guide risk management.”

With Willis Re’s new models, it is hoped that future losses from almost-certain floods will be lessened in the ever-growing, major cities of South America.

National Preparedness Month Q&A

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areyouprepared
The seventh annual National Preparedness Month (NPM) begins today. Launched by FEMA, the month-long awareness program is designed to encourage Americans to prepare for emergencies in their homes, businesses and communities. With that in mind, I took the liberty of contacting Brian Smith with American Express OPEN. He is an expert on commercial risk management and the InsuranceEdge advisor for the company. With a focus on business insurance, I presented him with a few questions. (If you should have any feedback on this Q&A, please feel free to leave a comment.)

What’s the best type of insurance to cover businesses against disasters?

Brian Smith: There are two areas of coverage that must be considered when facing the decision to purchase business insurance: property and business interruption. Property insurance will protect against damage to the physical condition of the business along with the items that sustain operations, such as equipment and fixtures. Property insurance is a mainstay in commercial programs, oftentimes required and rarely overlooked. Business interruption insurance, however, is often undervalued; it is the most critical program needed to sustain operations during a disaster. There are seven points a business owner should consider if questioning the need for business interruption coverage:

  1. It allows the owner to recoup lost sales and income of the business;
  2. While the business is down due to the disaster, it will allow the operations to continue during rebuilding;
  3. Income and profits are protected;
  4. By staying afloat, the business will be able to retain key clients and contracts;
  5. Business interruption insurance allows for the employer to keep ALL employees;
  6. As mentioned, property insurance and business interruption claims are often LARGER than the property loss;
  7. And finally, the business will likely receive a more rapid and equitable loss settlement on the property claim.

Do different types of companies require different types of insurance and does the business’ location matter in such a decision?

BS: Each company will have its own unique risks associated with it. These must be evaluated by a commercial insurance professional to determine the right coverage for the identified exposures. Taking into consideration the location of a business, however, is one of the key factors. Distance from the coast is one factor, due to exposure to natural disasters such as hurricane and flood. In this case, flood is highly recommended and may be required based on banking terms or contractual needs. An additional type of coverage within the business interruption arena is contingent business interruption. This type of insurance protects the business against a loss due to a dependency on one buyer, supplier, manufacturer or leader property such as in a mall or shopping plaza.

Is now a good time to reassess commercial insurance coverage? If so, why?

BS: The answer here is a resounding YES! Commercial insurance rates are very low at this point. The insurance industry is facing its sixth year of a “soft market,” where insurance companies have lowered rates to unprecedented levels. Insurance program development during this time is highly recommended due to opportunities involving greater coverage, competitive rates and new client demands on both the insurance companies and insurance agencies. Engaging a commercial insurance professional is the best way to see where improvements can and should be made based on operation, location and physical hazards.

Is National Preparedness Month a tool to encourage businesses to analyze their stage of disaster preparedness? How?

BS: I believe it is. The U.S. Department of Homeland Security is shepherding this program at the state and national level. Accompanied by several commercial and personal insurance providers/groups, this national marketing campaign can bring a level of awareness needed for home and business exposures. Coinciding the hurricane season, any awareness program that brings to light what needs to be considered in the event of disaster is always welcome.

What else should businesses know about the importance of being covered from disaster?

BS: Business owners should be aware of the possibility that current insurance programs may be under-estimated or inadequate. A comprehensive review of key items identifying areas of exposure should be considered on an annual basis. Review of current insurance policies is necessary to ensure coverage levels are accurate as well as appropriate. New or changing business operations can have a substantial impact on the monetary needs of a company should it be impacted by a natural disaster. Insuring these exposures properly can only be done if each is understood by the owner and insurance agent and steps are taken to include these values on the current or renewing program.