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Venice Sees Near-Record Flooding

The city of Venice, Italy, faced the worst flooding of its famous canals since the devastating floods of 1966. Venice has suffered major economic impact from this new round of flooding, with Mayor Luigi Brugnaro predicting that the damage will cost hundreds of millions of Euros, and claiming climate change is to blame.

The recent flooding paralyzed many local businesses, forcing schools to close and disrupting the city’s bustling tourist industry. When the salt water of the canal rises, it can destroy centuries-old architecture and wipe out entire inventories.

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And since insurers have refused to provide flood coverage to Venetian businesses due to the ever-present flooding threat, costs can surge even more.

After the 1966 floods, the city began planning a sea barrier to combat the increasing flooding, called the Mose Project, but it has largely languished since then, reportedly due to corruption and delays. The barrier consists of gates that rise with the tide to prevent flooding at different inlets of the Venetian Lagoon, the bay surrounding Venice. The project has been formally underway since 2003 and has cost billions of Euros so far, with its engineers now predicting the barrier will be in place by the end of 2021, while others say 2022.

As the floods have gotten worse, Venetians have taken to the streets to protest the city’s mismanagement of flood prevention and response measures, as well as tourist cruise ships that produce waves they allege have eroded the city’s foundations. Venice has also seen a slow trickle of people leaving the city, as the constant flood risk has made life and business operation untenable for many. According to NBC News, of about 53,000 residents in the city’s center, Venice lost over 800 residents last year alone.

As with many recent extreme weather events around the world, some experts believe the floods may be the result of climate change. Environmental economist Shouro Dasgupta told NBC News that the frequency and severity of the city’s floods have increased significantly. “Since 1951 until today, we have had 21 severe flooding events,” he said.

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“Out of those 21, 13 have been since 2000 and, out of those 13, eight have been since 2012.”

The Venice city council reportedly rejected measures to combat climate change minutes before floodwaters actually reached the council chambers. Pictures of the flooded government chambers posted by city councilor Andrea Zanoni went viral—an ironic symbol of official inaction in the face of climate change’s effects. Zanoni told CNN that the council rejected measures to fund renewable energy, to make city buses (currently running on diesel) “more efficient and less polluting,” and to address the local use of polluting stoves and plastics.

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The council’s president, Roberto Ciambetti, refuted the assertion that the city’s government was ignoring climate change, citing budget provisions dedicated to fighting air pollution and smog.

Venice Flooding

Last week, the United Nation’s Environment Program released a report stating that countries must increase their carbon-cutting measures dramatically to prevent warming of 3.2 degrees Celsius by the end of the century. The report noted that the many of the world’s 20 richest countries, which are responsible for 78% of global emissions, have not committed to reducing their emissions to zero. Italy is one of the few countries that have made this commitment, albeit as a long-term target.

Looking Back at the Big Flood: Time to Examine Your ‘Human Supply Chain’

The devastation left behind after Hurricane Harvey is a reminder that people are a critical link in the effort to build community storm resilience. We often remind our customers that to prepare for a disaster, they need to consider their supply chain risk—will they be able to access goods and services in the aftermath of a storm.

One area that is often overlooked is what is often called the human supply chain, which consists of your employees, customers and others members of your community.

Beyond ensuring that your employees are safe, business owners may need to consider other concerns: Do you have a plan that will allow your employees to continue working during the recovery? Can they work remotely? Are your employees trained in disaster preparedness? If your business relies on local customers, are they able to access your goods and services? What about rescue personnel and other business owners that provide goods and services to support the community?
Think of the human supply chain as a network of individuals who help your business to survive and continue to thrive after a disaster, like Hurricane Harvey, which dumped trillions of gallons of water on Texas a year ago.

Ensuring that this living, breathing supply chain remains connected is one of the recommendations culled from 13 in-depth studies that Zurich has produced on the impacts of natural disasters around the world. The latest report, “Houston and Hurricane Harvey: a call to action,” was released at the start of the 2018 hurricane season.

Zurich has developed a methodology called the Post Event Review Capability (PERC), which is an approach to understanding why a hazard becomes a disaster, and then from that, identifying entry points for building resilience.

report released earlier this month highlights some of the lessons learned from these PERC studies and encourages businesses and communities to focus on resilience to prepare for future storms.

The report identifies some common truths about major storms:

  • Every dollar spent on disaster preparedness saves four dollars in future losses;
  • Early warnings paired with contingency and emergency planning can save lives and protect businesses; and
  • Risk managers and communities must “build back better” to strengthen resilience after a disaster strikes.

The report also emphasizes the human element in storm preparation and recovery. For example, one of the central lessons that emerged from the PERC studies is that successful response operations are mostly reliant on institutions. Providing equipment, access to food and showers, assisting with cleanup and offering paid time off for employees can go a long way towards supporting a community and creating a culture of assistance.

Business leaders should provide employee readiness training, the report concludes. Some companies already do this, making preparedness a part of business as usual. One such company regularly schedules “disaster recovery days.” The company will randomly announce, “It’s flooding today, work from home,” to practice employee readiness for the real thing.

This recognition that humans play a critical role in the recovery process is partly why Zurich continues to support SBP, an organization that seeks to shorten the time between disaster and recovery.

Zurich has worked with SBP since 2009, helping the nonprofit bring hundreds of families back home after Hurricane Katrina. SBP has remained in Southeast Texas since Harvey to help aid in the recovery efforts there.

Recognizing the need for home and business owners to identify and mitigate their risks prior to disasters, Zurich in 2014 committed a $3 million grant to SBP through its Z-Zurich Foundation. The grant helped fund SBP’s Disaster Resilience & Recovery Lab, an initiative through which SBP trains home and business owners in 30 communities at risk for disasters across the United States over the course of three years.

In the future, hurricanes will continue to wreak havoc, destroying homes and lives, damaging critical infrastructure and shuttering businesses, but it’s important to remember that humans are the key to resilience. Keeping people safe, engaged and part of the recovery process can help ensure that communities remain resilient in the face of major storms.

Make Your Hurricane Preparations Now

With the Atlantic hurricane season’s official start on June 1, the time to check your buildings and existing contingency plans—or start a new one—is now, during hurricane preparedness week.

For 2017, Colorado State University’s hurricane research team predicts slightly below-average activity of hurricanes making landfall, with a forecast of 11 named storms, four hurricanes, and two major hurricanes.

The 2016 season is seen as a wakeup call, as 15 named storms and seven hurricanes formed in the Atlantic Basin—the largest number since 2012. Among the hurricanes was Matthew, a Category 4, which devastated Haiti, leaving 546 dead and hundreds of thousands in need of assistance. After being downgraded to a Category 2, Matthew pummeled southeast coastal regions of the U.S., with 43 deaths reported and widespread flooding in several states.

Here are 10 preparedness steps offered by FEMA:

The Insurance Institute for Business & Home Safety (IBHS) warns that small businesses are especially vulnerable. Of businesses closed because of a disaster, at least one in four never reopens.

IBHS offers these steps for preparing a business for hurricane season:

  1. Have your building(s) inspected and complete any maintenance needed to ensure your building can stand up to severe weather.
  2. Designate an employee to monitor weather reports and alert your team to the potential of severe weather.
  3. Review your business continuity plan and update as needed, including employee contact information. If you do not have a business continuity plan, consider IBHS’ free, easy-to-use business continuity plan toolkit for small businesses.
  4. Remind employees of key elements of the plan, including post-event communication procedures and work/payroll procedures. Make sure all employees have a paper copy of the plan. Review emergency shutdown and start-up procedures, such as electrical systems, with appropriate personnel, including alternates.
  5. If backup power such as a diesel generator is to be used, test your system and establish proper contracts with fuel suppliers for emergency fuel deliveries.
  6. Re-inspect and replenish emergency supplies inventory, since emergency supplies are often used during the offseason for non-emergency situations.
  7. Test all life safety equipment.
  8. Conduct training/simulation exercises for both your business continuity and emergency preparedness/response plans.

Interstate Restoration has a day-by-day list of steps for business storm preparation, based on NOAA recommendations. They include research, planning and documenting, gathering emergency supplies, checking insurance coverage and supply chain and finalizing your plan.

Making the Most out of a Crisis

CALGARY, ALBERTA, CANADA—Suppose your company experiences a major hurricane, tornado or fire: Property is destroyed and your business is stalled, meaning customers are left waiting.

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But there are buildings to be rebuilt and equipment to be replaced, and the claims process hasn’t even started. This is when the risk manager’s skills at placing the company’s insurance coverage and negotiating for the best payout can not only demonstrate their true value, but can put the company back on course, according to experts here at RIMS Canada’s annual conference.

“When there’s a serious property loss, this is the time for the risk manager to shine, because up until then it’s about premium, premium, premium,” Tom Parsons, manager of risk management at Fairmont Raffles Hotels International in Toronto said during a RIMS Canada Conference session. “Up until a serious loss occurs, I don’t think you feel the impact that you can give back to the company. Because what we do is buy insurance, so it has to work.

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It is what you helped craft and build into your policy through the years. You have created a policy that is robust, and that is going to cover everything—you hope.”

Among the examples cited was a soft drink bottling plant flooded with eight feet of water following a hurricane. While the company’s high-speed bottling equipment was damaged and would need to be replaced, explained Jeffrey Phillips, managing director in PwC’s U.S. forensic advisory practice, the issue was that floodwaters were highly contaminated due to a number of chicken and hog farms in the area. As a result, the company determined that the building could not be used for any type of food processing and would need to be demolished. The insurer, however, argued that the walls could be sealed, containing any contaminants. The company had found a competitor to do some of the bottling, but it wasn’t enough to fill their orders, Phillips said.

Because delivery of the new bottling equipment was slated to take months, there was also a large business interruption period being covered, he said. This is when innovation came into play. The bottling company was able to show the insurer that buying another plant rather than rebuilding would put them back in business sooner, cutting back on their losses. The insurer agreed and sent them a check. As a result, the company purchased a larger facility in a better location.

“They were up and running in six months—the business interruption had stopped,” he said. The better location also meant reduced shipping costs and the company gained market share. Because the company was able to make the case to its insurer, both came out ahead in the long run.

Phillips recommended that companies negotiating after a crisis “communicate, communicate, communicate” with their insurers.

They should also get their insurers to sign off on major contracts such as scope of work, rates and overhead and discuss changes to operations or facilities with the adjustment team and agree on scope of property damage repair or replacement whenever possible.

Insurers will typically push to return the facility to pre-loss condition, “unless you can prove the changes will save them money,” he added. “Insurers will not be creative for you, they don’t know your business or your goals.”