Category Archives: Disaster Recovery

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The Risk Management Angle on Time’s “10 Ideas for the Next 10 Years”

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Each year, Time magazine does a story on “10 ideas that are changing the world.” This year, the editors have made it a more forward-thinking feature, labeling it “10 Ideas for the Next 10 Years.” And as is the case with most everything these days, I managed to see several risk management-related angles in some of the trends they expect to shape the coming decade.

Here is a run-down with some thoughts.

time 10 ideas for the next 10 years

Time’s Idea: Remapping the World
“Good borders make good neighbors. Bad ones make wars”

This idea basically says that physically redrawing some national borders — or at least minimizing their importance over logistical factors like multi-national infrastructure — will cause less international and intra-national conflict. Obviously, the risk management benefits here would come from less political risk across the globe.

If Sudan could be divided, the civil wars there may become less intractable and economic opportunities may open up to multinationals — which could help both companies otherwise too concerned about conflict to set up shop in-country and the people living there who desire jobs and better access to goods. A world full of “good neighbors” also clearly benefits any utilities or other companies trying to lay down the transnational pipelines or internet cables that will be increasingly necessary in our increasingly globalized future.

Particularly in the Middle East.

Time’s Idea: Bandwidth Is the New Black Gold
“And it’s a scarce resource”

An under-reported risk, the dependence on bandwidth for real-time information exchange is increasingly vital to all companies and organizations. Whenever this is interrupted, so is business. Today, aside from major disaster situations, this interruption is mostly an inconvenience. But in the future, as more and more of this bandwidth is taken up by video and other resource-intensive applications, there may be real problems.

In time, the mere slowdowns we see today may be eclipsed by full-scale information traffic jams. But beyond that, the deeper problems will be with high prices and possible profiteering. As demand for bandwidth goes up, suppliers will logically be able to charge more, as happens in energy markets.

Can we rely on private industry — the cable and telephone companies — to build its way out of these problems? In a word, maybe.

It will be difficult to manage this risk individually, but organizations need to be thinking about these “information jams” in years to come. Tim Wu of the New American Foundation explains it further in this video.

Time’s Idea: In Defense of Failure
“Making mistakes is a great American freedom”

This idea centers on the idea that the great innovation that marked the United States’ ascendence to the front of the global economy in the 20th century was greatly aided by the fact that its citizens were not afraid to fail. They took big chances knowing that even if they failed, they would have a chance “to try, try again” without being entirely wiped out.

The article worries that this courageousness is waning, mainly due to macroeconomic realities, and that “rather than launch a quixotic war on failure” as the author argues has been done against complex financial instruments on Wall Street, “we should be using what we’ve learned to build a system that fails better.”

This, of course, is the new tenant of risk management: We should never try to avoid all risks — we just need to make sure we are taking calculated risks with contingencies built in for failure.

Time’s Idea: TV Will Save the World
“In a lot of places, it’s the next best thing”

Globally, the biggest impediment to better disaster preparedness and building codes is poverty. Places like Haiti and rural China just don’t have the resources to mandate and enforce developed world standards for things like foundations and reinforced concrete.

Somewhere lower on the list of challenges — but no less worth striving to overcome — is the educational gap. More so than in the developing world, the United States and Europe have learned from their past disasters. A lot of this has come from in-depth, post-mortm investigations of disasters. And a lot of the demand for such investigations has always come from the proliferation of TV news and the fact that citizens are generally outraged that such calamities could happen. People want to know why people were allowed to die or houses were permitted to burn, and the impetus behind that outrage often comes from seeing the tragic images in moving picture form on TV.

Too much TV has been associated with violence, obesity and social isolation. But TV is having a positive impact on the lives of billions worldwide, and as the spread of mobile TV, video cameras and YouTube democratize both access and content, it will become an even greater force

Sure, a lot of TV is more candy than vegetables (think Jersey Shore, SportsCenter or American Idol), but if you are still among those who erroneously think that television will rot your brain, you obviously haven’t seen The Wire. Or Spike Lee’s When the Levees Broke, which premiered on HBO.

In related news, The Wire creator David Simon’s upcoming HBO show Treme will focus on the music scene in post-Katrina New Orleans. Expect something amazing that will speak on what was the worst “natural” disaster to hit this country.

And, yes, this was mostly just an excuse to make you watch the new trailer for Treme embedded below. (via Video Gum) (UPDATE: That trailer is no longer available … replacement video below. Don’t worry, it’s just as good. Probably even better.)

You can also view the other six “ideas for the next 10 years” over at Time.com. Let us know of any other major risk management-related concepts that stand out to you.

Insured Losses from Chilean Earthquake: Update

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Last Wednesday I blogged about the Chilean earthquake costing insurers up to $8 billion. That number has since been revised by Swiss Re — the world’s second largest reinsurer claims the impact on the sector would be between $4 and $7 billion.

Swiss Re says “it’s own losses from last month’s 8.8 magnitude earthquake would total about $500 million.” Germany’s Munich Re has said it expects to lose about $543 million from the Chilean disaster.

Analysts said that while the losses were large, they were probably not sufficient to reverse recent falls in the prices reinsurance companies charge insurance firms to cover natural disasters such as earthquakes or hurricanes. “Although it will almost certainly lead to a change in reinsurance prices for business in that region, it is not an industry-changing event on its own,” said Helvea analyst Tim Dawson.

Economic recovery from an earthquake is easier when the affected area’s economy is a strong one. Chile’s successful copper production industry was unaffected by the quake. And even though it’s wine, fish and paper pulp industry took a small hit, it’s overall economic outlook remains strong. That economy is now in the hands of incoming President Sebastian Pinera who takes office today. The billionaire conservative businessman and Harvard-trained economist has a tough job ahead of him but many feel he is well-equipped.

The earthquake that struck Chile on February 27 was not the biggest natural disaster the country has faced. Below is a video of the record-breaking 1960 earthquake that registered 9.5 on the Richter scale, the largest recorded earthquake in history — killing approximately 1,655 and causing $550 million in damage. The ravaging tsunamis that followed caused 61 deaths and $75 million worth of damage in Hawaii. Damage was reported in Japan and the U.S. as well. It is the only earthquake known as an “international disaster.”

New Research Reveals Some Gulf Coast Property Elevation Levels to Be Dangerously Low

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As Claire Wilkinson of the III brought to my attention the other day, a new study from the Institute for Business & Home Safety has revealed some disturbing realities about how vulnerable the Gulf Coast remains to flood risk. The study details the destruction that Hurricane Ike cause last year.

According to the report:

it is possible to build homes that can withstand extreme hurricane conditions, but also points out that steps must be taken to improve building standards and products in order to better protect coastal properties. The key findings and recommendations stemming from the research conducted by the IBHS engineering team are supported in the following pages through examples of construction failures and successes and comparisons between building code-plus and traditional construction techniques. The research also led to recommendations for strengthening the built environment through public policy and building code changes.

Three specific proclamations are also laid out: (1) Current elevation requirements in surge-prone areas are not high enough, (2) new research is needed to assess actual performance of roofing products and systems in order to improve material production and installation specifications, ad (3) Water intrusion must be better managed – through a combination of structural improvements and more realistic testing.

Claire succinctly offers some more insight into the report’s results:

As well as providing flood insurance, the NFIP establishes base flood elevation (BFE) levels for properties. All but a handful of properties located closest to the coast on the Bolivar Peninsula, Texas and even built to the highest elevation requirements, were washed away during Hurricane Ike. By contrast, the study found that 10 homes on the Bolivar Peninsula designed and built under the IBHS Fortified…for safer living program, survived the storm with minor damage. The Fortified homes had outdoor decks at 18 feet that were destroyed, but the homes themselves which were elevated to 26 feet, survived. According to IBHS, most homes in coastal areas are built to or slightly above 100-year BFEs.

Hopefully, these structures will not be tested with hurricane-force winds and storm surges this hurricane season. Still, such findings make it all the more necessary for those on the Gulf Coast — including businesses, legislators, regulators, engineers and scientists — to remain vigilant and continually strive for better protection.

Hurricane Ike Study

National Preparedness Month Takes FEMA to School

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September is National Preparedness Month (NPM) and FEMA has launched a series of initiatives designed to promote disaster readiness throughout the country. Some of the programs that the agency is promoting include Ready America (which helps educate families and individuals), Ready Business (which breaks down the preparedness basics for companies and may be very helpful to many of our readers) and Ready Kids (which is an attempt to ingrain the concept of preparedness to the next generation).

Many states have jumped on board with the national effort and despite the fact that September seems a little late in the hurricane season for states like Louisiana and Florida to push the concept, awareness is the key here — any extra attention that FEMA’s outreach can get will be helpful.

In Colorado, the agency has had some particular success with its outreach as it took to Elbert Elementary school to promote the same agenda advocated on the Ready Kids website. With some help from Disney, FEMA was able to bring some edutainment to the kids, who had a good time and hopefully learned a little too.

Elbert Elementary received one shelter in place kit for each classroom, which included food, water, blankets and additional items to assist teachers and students for up to 12 hours in the event of an emergency situation.  Teachers were educated on the kit and encouraged to add to it as needed.
READYColorado and Elbert Elementary kicked off preparedness events with a Radio Disney Party.  As part of each assembly, Radio Disney educated the children on various elements of preparedness, including fire safety, emergency kit packaging, pet safety in emergencies, and flu readiness.  Radio Disney also featured fun contests including various preparedness trivia games, a Readiness Toss, kit creation, and a Readiness Scramble.  There also was plenty of dancing and singing with Radio Disney DJs.  Kids received prizes and were encouraged to think about preparedness actions they can take at home and at school.
Other school preparedness parties are scheduled throughout the state during the month of September.

Elbert Elementary received one shelter-in-place kit for each classroom, which included food, water, blankets and additional items to assist teachers and students for up to 12 hours in the event of an emergency situation. Teachers were educated on the kit and encouraged to add to it as needed.

READYColorado and Elbert Elementary kicked off preparedness events with a Radio Disney Party. As part of each assembly, Radio Disney educated the children on various elements of preparedness, including fire safety, emergency kit packaging, pet safety in emergencies, and flu readiness. Radio Disney also featured fun contests including various preparedness trivia games, a Readiness Toss, kit creation, and a Readiness Scramble. There also was plenty of dancing and singing with Radio Disney DJs.  Kids received prizes and were encouraged to think about preparedness actions they can take at home and at school.

Other school preparedness parties are scheduled throughout the state during the month of September.

The video below isn’t all that compelling, honestly, but it provides a decent idea of what the day entailed. I’m not sure how many resources or people the agency has devoted to such endeavors, but I would urge any educators who would like to get involved in something similar or just want to receive educational materials to contact FEMA through it’s Ready America contact page.