Category Archives: Disaster Preparedness

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Catastrophic Floods More Frequent in 2019

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Last week, after already experiencing heavy rainfalls and flooding, New Orleans was preparing for tropical storm Barry, expecting the storm to overflow or even breach the city’s levees. Flights in and out of the city were cancelled, as were concerts and other public events, as the city braced for catastrophe. Barry ended up narrowly missing New Orleans, and instead moved inland, drenching other parts of Louisiana and Mississippi and causing floods and mass power outages in those areas. It was yet another example of how major flooding has become a normal occurrence for many regions of the country, and by all indications, it is becoming worse each year.

The National Oceanic and Atmospheric Administration (NOAA) stated in its report 2017 State of U.S. High Tide Flooding and 2018 Outlook that “The projected increase in high tide flooding in 2018 may be as much as 60 percent higher across U.S. coastlines as compared to typical flooding about 20 years ago and 100% higher than 30 years ago.” This prediction turned out to be accurate, as the United States saw massive flooding throughout 2018, including “sunny-day” or “high-tide” flooding that occurs during high tides outside of hurricane events.

In its recent report on 2018 high-tide flooding and 2019 outlook, the NOAA said that these floods’ median frequency in 2018 “reached 5 days, which tied the historical record of 2015.” Of the 98 observed locations along the U.S. coastline, 12 reportedly broke or tied their all-time records for high-tide flooding in 2018. And now, the NOAA is predicting that 2019 could be even worse.

The NOAA noted that high-tide flooding “is increasingly common due to years of relative sea level increases. It no longer takes a strong storm or a hurricane to cause flooding in many coastal areas.” The Union of Concerned Scientists has said that sea level rise is accelerating, that “sea levels in the U.S. are rising fastest along the East Coast and Gulf of Mexico,” and that the primary reason for this sea level rise is climate change melting land ice and heating oceans.

According to the NOAA’s 2019 projections, it expects high-tide flooding along the U.S. coastlines this year to reach double the numbers from 2000. Additionally, “the Northeast Atlantic could see a 140% increase, the Southeast could see a 190% increase, and the Western Gulf of Mexico could see a 130% increase.”

Almost 40% of the U.S. population lives in coastal areas, and could be at risk from flooding effects. With the start of hurricane season, these dangers will only increase as storms batter the coasts. Even before Barry threatened, New Orleans faced massive flooding last week, while Pittsburgh contended with flash floods. And the week before, heavy rains left Washington, D.C. and surrounding towns swimming in water that overwhelmed the city’s storm water pipes.

These increasing floods mean serious losses for people, municipalities and businesses. The recent DC-area floods reportedly caused $3.5 million in damage to Arlington, Virginia county infrastructure alone. In March, a “bomb cyclone” hit Nebraska, with heavy rainfall causing damages totaling more than $1.3 billion. This figure includes $449 million in road, levee and other infrastructure damage, as well as serious damage to more than 2,000 homes and 340 businesses. Iowa also experienced flooding that caused water treatment plants to shut down, depriving two cities’ residents of fresh water. And across the Midwest, agriculture was also hit hard by flooding, slowing corn and soybean planting. The delay may decrease harvests by at least 8% and increase prices worldwide.

As Risk Management Monitor has previously reported, Texas A&M University at Galveston and the Texas General Land Office examined the 50-year impact of a major storm hitting Galveston Bay on the Texas coast near Houston, finding that major storm events that caused flooding would have huge secondary effects on the economy, both locally and nationally.

Various states, including those along the Mississippi River, have already enacted flood control measures like levees, dams and flood walls, but have seen this year’s increased flooding defeat these measures. Others have encouraged residents to purchase flood insurance to offset losses. But the increasing scope of future floods may mean that these steps are not enough. Though tropical storm Barry missed New Orleans, experts have still expressed concern about coming storms possibly “topping” the city’s levees, which could cause even more damage to the already-flooded city.

Global Heat Waves Signal Climate Risks

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India is currently suffering under a heat wave that has lasted over a month, with temperatures reaching a record 118 degrees Fahrenheit (48 degrees Celsius) in New Delhi on June 10 and 122 degrees (50 degrees Celsius) in the western city of Churu. The death toll has been estimated to be at least 36, though some sources put the number at more than 150. Europe is also preparing for its own massive heat wave this week, with temperatures expected to be 36 degrees Fahrenheit (20 degrees Celsius) higher than the seasonal average of 72 degrees (22 degrees Celsius).

This pattern of heat waves has become a yearly occurrence across the globe. Europe faced similar heat last year, as did Asia, with Japan experiencing record-breaking temperatures in 2018, which sent more than 71,000 to hospitals, killing 138. North America also saw extended higher temperatures in 2018, with 41 heat records across the United States, and heat-related deaths overwhelming Montreal’s city morgue.

Experts say that these global record-breaking incidents are the result of climate change, and likely forecast a new normal of dangerous summer heat.

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According to Stefan Rahmstorf, co-chair of Earth System Analysis at the Potsdam Institute for Climate Research (PIK), “Monthly heat records all over the globe occur five times as often today as they would in a stable climate. This increase in heat extremes is just as predicted by climate science as a consequence of global warming caused by the increasing greenhouse gases from burning coal, oil and gas.

” French national meteorological service Météo-France echoed these concerns, saying that heat waves’ frequency “is expected to double by 2050.” And according to a 2017 study from The Lancet Planetary Health journal, the number of deaths resulting from weather-related disasters could skyrocket in the future, killing as many as 152,000 people each year between 2071 and 2100, more than 50 times greater than the average annual deaths from 1980 to 2010.

As Risk Management has previously reported, these changes are also already impacting business operations globally, with direct economic losses from climate-related disasters (including heat waves) increased 151% from 1998 to 2017, according to the United Nations Office for Disaster Risk Reduction. Heat waves have serious effects on business operations, impacting things like road conditions and agriculture, as well as workers’ health and safety. More than 15 million U.S. workers have jobs requiring time outdoors, and according to the World Bank, even for indoor workers, productivity declines by 2% per degree Celsius above room temperature.

Many countries have taken steps to mitigate the effects of heat waves on their populations. For example, since 2016, India has been providing shelter for homeless people, opening water stations for hydration, cutting building heat absorption by painting roofs white and imposing working hour changes, curfews and restrictions on outdoor activities. These efforts have successfully reduced heat-related deaths from more than 2,400 in 2015 to 250 in 2017.

The U.S. Environmental Protection Agency (EPA) recommends similar steps to the ones India is taking, as well as ensuring that energy and water systems are properly functioning, establishing hotlines for reporting cases of high-risk individuals and encouraging energy conservation to reduce the chances of overwhelming electric systems. The U.S. Occupational Safety and Health Administration (OSHA) recommends that employers and workers facing higher temperatures in the workplace pay close attention for the signs of heat stroke, and keep three words in mind: water, rest and shade.

While these on-the-ground measures can reduce the immediate effects on workers and vulnerable populations like the elderly, children and the homeless, PIK’s Rahmstorf warns that “Only rapidly reducing fossil fuel use and hence CO2 emissions can prevent a disastrous further increase of weather extremes linked to global heating.”

Texas Study Shows Business Impact of Major Storms

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A new study conducted by Texas A&M University at Galveston and the Texas General Land Office examines the 50-year impact of a major storm hitting Galveston Bay on the Texas coast near Houston, including secondary effects to the economy. The study focused on catastrophic “500-year” flood events (with a one-in-500 chance of occurring in a year), which, while rare, have hit the state 3 times in recent years. This includes Hurricane Harvey, which struck Louisiana and Texas in August 2017, causing $125 billion in damage, according to the National Hurricane Center.

These larger storms have serious economic impacts locally, regionally and nationally. Over a 50-year time frame, the study notes, “the projected economic impact on Texas’ Gross State Product (GSP) of storm surge without coastal protection is substantial.” In the wake of a 500-year magnitude event, the regional petroleum and chemical manufacturing sectors would see their output decline by 19% (or $175.4 billion) in lost revenue, as well as a projected 17% loss of petroleum jobs (approximately 155,000 jobs) and a petroleum price increase of 13%. It would also impact the region’s housing, with the sector declining by 8%, or $39.5 billion lost in sales.

A 500-year surge event striking Galveston Bay would also have serious impacts for national economic activity, especially because the region processes 25% of the petroleum and more than half of the jet fuel used in the United States. According to the study, U.S. GDP could drop 1.1% (approximately $883 billion), U.S. exports would suffer a 4% drop (approximately $1.66 billion) and “30 states not including Texas will have lower GSP in response to a surge event in Texas.”

“The Galveston Bay region is one of the most flood- and surge-prone areas in the United States with vast amounts of vulnerable residential, commercial, industrial and petro-chemical areas at risk,” said Texas Land Commissioner George P. Bush. “This study clearly demonstrates that, without any new protections in place, future storm surges could have substantial and lingering impacts on Texas’ economy and send lasting ripples through other economic sectors nationwide.”

Turning to mitigation, the authors of the report assessed the potential measure of a 17-foot “coastal spine,” also called a “coastal storm suppression system,” made up of “connecting seawalls and fortified dunes/levees along the coastline to retractable gates.” In October, the Army Corps of Engineers released the study Coastal Texas Protection and Restoration Feasibility Study proposing a similar example of this sort of structure—74 miles of barrier, including “floodwalls (inverted T-walls), floodgates (both highway and railroad floodgates), seawall improvements, drainage structures, pump stations, and surge barrier gates.”

The researchers estimate that a coastal spine would reduce the region’s lost petroleum and chemical manufacturing sector losses to 3% and 5%, respectively, a 1% reduction in regional unemployment, and a 1% increase in petroleum product prices. The report also claims that a coastal spine mitigation plan would reduce Houston-Galveston regional insurance premiums by as much as 28%. This could provide significant relief for insurers as well. Even though insurance and reinsurance only covered about 30% of the total wind and flood damage from Hurricane Harvey, this amounted to tens of millions in losses.

In terms of construction cost, the Texas researchers polled residents of three local counties and found that 56% “believed that both government and port industries should be responsible for financing the coastal barrier system,” and a majority agreed that some form of taxation should support its construction.

How a Strong(er) SRM Program Could Have Helped Boeing

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A strategic risk management (SRM) program is designed to assist organizations in identifying, prioritizing, and planning for the strategic risks that could impair or destroy businesses and reduces the chances of these kinds of crises. And while hindsight is 20-20, an SRM program – or a more effective one – could have helped Boeing avoid some of its recent high-profile crises.

Between October 2018 and March 2019, two crashes involving the Boeing 300 737 MAX 8 models resulted in the loss of 346 lives. Since then, Boeing has:

  • had a possible criminal investigation commenced against it,
  • lost $22 billion in market value in the week following the Ethiopian Airlines’ crash in October,
  • had more than 300 737 MAX 8s grounded worldwide,
  • sustained significant reputational harm,
  • received demands from airlines seeking compensation for lost revenue,
  • been sued by crash victims’ families, and
  • had sales orders cancelled or suspended.

This is a crisis from which it may be difficult to recover.

One could trace back some of the risks to its decades-long rivalry with Airbus and an effort to remain viable.

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When American Airlines indicated it was close to finalizing an exclusive deal with Airbus for hundreds of new jets, Boeing sprung to action. The New York Times reported that Boeing employees then had to move at “roughly double the normal pace” to avoid losing “billions in lost sales and potentially thousands of jobs.”

An SRM program would have required an assessment of the business model and the associated risks, including competitors, long before the call from the CEO of American Airlines. The risks would have been prioritized and this information would have been factored into strategic plans that would have included responses to material risks.

During the scramble, Boeing mirrored Airbus’ operations and mounted larger engines in existing models.

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 The objective seemed straightforward: Make minimum changes to avoid the need for training in a simulator, decrease costs, and build the redesigned model quickly. But a risk was that mounting larger engines changed the aerodynamics in the aircraft, requiring a consequential need for new software, a Maneuvering Characteristics Augmentation System (MCAS) which was supposed to prevent stalling. Boeing’s view was that pilots did not need to be trained on the software and federal regulators agreed.

However, in an effective SRM program the C-Suite would have been advised that the strategic and life safety risks were material and that training for pilots was indeed necessary.  In addition, all such risks would have been assessed to determine whether they could be used to obtain a competitive advantage.

For example, including vital safety features in the base cost of aircraft (as opposed to charging extra for them) and requiring a focus group of pilots with no financial relationship with Boeing to test the newly designed 737 MAX 8s and the MCAS system would have been a way to solidify Boeing’s reputation for safety first.

An SRM program, which monitors progress in achieving strategic objectives with a focus on continuous improvement, would have looked at the Indonesian Lion Air and the Ethiopian Airlines crashes as an opportunity to confirm that Boeing puts safety first by grounding the aircraft. Instead, Boeing urged the U.S. to keep flying its jets until after 42 regulators in other countries had grounded them and appeared to care more about economics than life safety. Only seven months ago, Boeing was synonymous with efficient jet planes and commercial aviation – it was a reputation that took decades to build. Now, the company has a long, uphill climb to resolve its many challenges and rebuild its brand.

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An SRM program cannot succeed without full support from the C-Suite as it has to be integrated into the business model and decision-making processes in order to be effective, and in time we will learn more about what risk management protocols were followed across Boeing’s organization.

At RIMS 2019, Marian Cope will lead a panel of industry experts in discussing reasons to transform an ERM program into a SRM program or develop a SRM program in NextGen ERM:  Strategic Risk Management. The session will take place April 29th at 1:30 pm.