Category Archives: Environmental Risk

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Mudslide Was Forewarned, Experts Assert

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Shutterstock/Dan Schreiber. Mudslides scar Washington hillsides.

Even as rescue teams search for more bodies in the aftermath of the March 22 mud slide in Washington, records show that while the area is prone to these disasters, homes were allowed to be built there anyway.

The slide, triggered by excessive rain, has claimed 24 lives so far and 176 are still unaccounted for, the Associated Press reports.

Snohomish County Emergency Management Director John Pennington said during a news conference on March 24 that the slide was “completely unforeseen” and that it “came out of nowhere.”

In a 1999 report filed with the U.S. Army Corps of Engineers, however, geomorph­ologist Daniel J.

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Miller and his wife, Lynne Rodgers Miller, warned of “the potential for a large catastrophic failure” in the area, according to the Seattle Times.

“We’ve known it would happen at some point,” Daniel Miller said. “We just didn’t know when.” He added that after a mudslide in 2006, he was surprised to find that more building was allowed in the area just weeks later. “Frankly, I was shocked that the county permitted any building across from the river,” he told the Seattle Times. “We’ve known that it’s been failing,” he said of the hill. “It’s not unknown that this hazard exists.

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The area has a history of mudslides. After two earlier slides on the hill in 1949 and 1951, recommendations were made to permanently divert the Stillaguamish River or build berms to reinforce the slide area.

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Howard Coombs of the University of Washington, however, concluded that any fix was likely to be temporary.

A thousand-foot berm was built in the fall of 1960, but it was mostly destroyed by high water in the Stillaguamish the following year, according to state records. Other barriers that were built were also destroyed by mud, the report said.

Tracy Drury, an environmental engineer and applied geomorphologist said there have been discussions over the years about whether to buy out property owners in the area, but that the talks never became serious proposals, The Seattle Times reported.

Marine Losses Continue Downward Trend

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The marine industry continued to see a steady decline in the number of large ships losses globally since 2002, with 94 ships lost in 2013, down 20% from 117 reported in 2012, according to a study by Allianz.

The “Safety and Shipping Review 2014” by Allianz Global Corporate & Specialty found that of ships lost, the largest number, 32, were cargo vessels; 14 were fishing vessels; and 12 were bulk shipments. Only six passenger ships were lost, the survey found. The most common cause of losses in 2013, and over  the last 12 years, was foundering (sinking or submerging). The demise of 69 ships accounted for nearly three-quarters of all losses—with bad weather a significant driver.

Worldwide there were 1,673 losses from Jan. 1, 2002-Dec. 31, 2013, with an average of 139 per year. The top geographic area for losses has been South China, Indo China, Indonesia and Philippines. The area including British Isles, North Sea, English Channel and Bay of Biscay is still ranked fourth, despite improvement. With 45 losses overall, the U.S. eastern seaboard improved in 2013, dropping out of the top 10 regions.

According to the study, January is the worst month for all casualties in the Northern Hemisphere. There were 23% more losses in January compared with the quietest month, June. In the Southern Hemisphere July sees 41% more losses than April.

The majority of losses are caused by machinery damage, the reason for most losses in marine insurance. Statistics from the International Union of Marine Insurance (IUMI) report that 40% of hull claims are machinery damage and account for 20% of costs.

The review found that while piracy is still a threat, it has also subsided. Piracy at sea reached its lowest levels in six years, with 264 attacks recorded worldwide in 2013, a 40% drop since Somali piracy peaked in 2011. Fifteen incidents were reported off Somalia in 2013, including Gulf of Aden and Red Sea incidents, down from 75 in 2012, and 237 in 2011 (including attacks attributed to Somali pirates in Gulf of Aden, Red Sea and Oman).

According to the study: “The very real threat of piracy for ships operating in the Gulf of Aden reached the general public last year as the Hollywood Oscar-nominated blockbuster Captain Phillips was released. Tom Hanks played the lead as the master of the pirated Mærsk Alabama, broadcasting the piracy problem to a much wider audience and raising awareness of its consequences. The steps that the international maritime community has taken to reduce the threat of piracy in the Gulf of Aden have been extremely successful with the number of ships seized and hostages taken in 2013 significantly down on 2012.”

Lower losses overall were attributed to a number of factors including increased regulation, which has helped the maritime industry improve its safety record. Because the quality of operations varies in different regions, however, there is a big need for universal regulations on ship safety to reduce the risk of casualties and loss of life, the survey concluded.

 

Trends and Predictions for Retailers

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Last year, retail and consumer packaged goods (CPG) companies faced challenges stemming from evolving regulatory compliance, brand exposure, reputational risk and increasingly complex global supply chains. No doubt 2014 will prove to be a pivotal year for organizations to demonstrate their focus and commitment to strong governance, risk management, and compliance in order to truly emerge as leaders. Here is a look at some top trends that have influenced the industry, and a few predictions that will shape the year ahead.

2013 Key Trends:

Increased Volume and Complexity of Regulations. In 2013, the retail/CPG industry faced a flurry of new and amended regulations spanning environmental compliance, conflict minerals reporting, product safety, data privacy, anti-corruption, product packaging and labeling to name a few.

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Ensuring compliance and staying one step ahead of regulators requires that retail and CPG organizations establish more centralized and collaborative compliance programs.

Managing the Supplier Ecosystem. We saw that environmental, man-made, and human rights issues can threaten the financial stability and reputation of retail and CPG organizations. Establishing a unified view of the organization and its entire supplier ecosystem requires consistency and transparency, which can be achieved only through stronger due diligence, monitoring, and reporting processes.

Focus on Collaboration. In response to increased compliance mandates, and added complexity throughout the supply chain, internal business functions have begun converging and collaborating in new ways. A strong, compliant, and risk-aware organization brings together the right people, the right skill sets, and necessary resources against a shared vision, mission, and purpose.

2014 Predictions:

Rising Importance of Reputation. Non-compliance, fines, product recalls, bribery and corruption allegations, customer activism, factory fires, and health and safety issues have put many retail and CPG companies in the hot seat.

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These incidents not only play out over front-page headlines, but can spread virally across social media sites in a matter of minutes. In 2014, building and maintaining an organization’s reputation will become a matter of survival.

Complying with the Affordable Care Act (ACA). The ACA impacts retail companies that employ a significant number of temporary workers. According to the ACA, health insurance must be provided to full time employees who work at least 30 hours per week. In the retail industry, however, employees who work at least 40 hours per week have traditionally been considered full-time. Overcoming this discrepancy will require new policies and processes that will impact employees, human resources teams, and compliance executives alike.

Investments in Technology. As operations expand and supplier ecosystems become more diverse, organizations will be faced with new opportunities and new challenges. We will see organizations continue to focus on integrating the activities of multiple functions.

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Investing in new technologies and tools to help integrate quality customer service, regulatory compliance, supply chain governance and security can help organizations realize greater efficiencies, enhanced agility and improved business performance.

Drought Claiming California Crops

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While many California farmers are taking a wait-and-see approach regarding future rainfall, some almond growers are moving ahead with the removal of mature trees. But much more is at risk, including jobs and agricultural products for the rest of the country.

California grows about half of all U.S. fruits and vegetables, mostly in the Central Valley region. It also ranks as the top farm state by annual value of agricultural products. Crops exclusive to California are almonds, dates, figs, grapes for raisins, pomegranates, olives, peaches, pistachios, plums, rice, walnuts, kiwi fruit and clover seed.

In January, Gov. Jerry Brown declared a drought emergency, and this month President Obama announced relief aid for California farmers and ranchers. Because of the severity of the ongoing drought, the U.S. Bureau of Reclamation as well as the State Water Project said there would be no water for Central Valley farmers and ranchers. According to the California Farm Water Coalition, it is expected that about 2 million acres in the San Joaquin Valley will receive no water this year.

“We estimate that more than 500,000 acres of farmland will be idled this year due to water supply shortages,” Mike Wade, executive director of the California Farm Water Coalition said in a statement. He added that agricultural water supply shortages “harm more than just the farms that produce hundreds of varieties of food, fiber and nursery products. Unemployment may hit 15,000 seasonal and full time agricultural workers if this year’s drought has the kind of impact on the economy that occurred in 2009.

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Water shortages then led to idling of 269,000 acres and over 7,400 workers, about half of the expected impact of this year’s drought.

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       Graphics/California Farm Water Coalition

Barry Baker of Baker Farming Company, which normally grows 5,000 acres of almonds, is one of the growers who is removing trees— 20% of them. The Associated Press reported that Baker calculated that before the summer almond harvest he would need to spend $2.5 million. That includes irrigating orchards with scarce, expensive water and paying to have the trees pruned and sprayed. He would also need to have bee hives brought in to pollinate the blossoms at a cost of nearly 0 an acre.
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Not knowing whether there will be any relief, he made the decision to go ahead and remove the trees.

Once removed, the trees are being turned into wood chips and taken to power plants for bio fuel. Tim Lynch of Agra Marketing Group said power plants in the state currently have almost more wood chips from almond trees than they can handle.

The Agricultural Marketing Resource Center reports that California is the only state producing almonds commercially. The state’s 2012 almond crop totaled 2.0 billion pounds, a 2% drop from the previous year and was valued at $4.3 billion. Per person consumption of almonds in the United States has generally been increasing and reached 1.8 pounds in 2011, according to the Almond Board of California.

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The United States is the largest producer of almonds, harvesting 80% of the world’s crop, followed by the European Union – 27, of which Spain, and Australia each harvest 6%, the organization said.