Aug. 13, 2004—As of this morning, Hurricane Charley was threatening the Floriday Keys after hitting Cuba. Although Hurricane Charley is an immediate threat to residents of Florida, the storm has the potential to affect residents and businesses across the Eastern seaboard of the United States.



"Risk management solutions, which forcasts the effect of catastrophes for insurance companies, said yesterday that insured losses may top ten billion dollars if Charley is as severe as the National Hurricane Center expects.”
Risk Management Solutions, Inc. on Bloomberg Radio, 8/13/04

Currently a Category 4-strength storm with winds exceeding 100 miles-per-hour, Charley is capable of causing significant flooding throughout the coastal areas. In addition, with parts of the Eastern seaboard, such as North Carolina, recovering from the heavy rains Tropical Storm Bonnie and other storms brought earlier this week, the chances of flooding in some areas is even more acute.

Even if you believe your business is located only in areas that are unlikely to be affected by the storms you may still face weather-related risks if a supplier on which you rely is forced to suspend production. With today's complex, interdependent, and often global supply chains, it is likely that severe weather will have some effect on your operations.

Understanding the potential danger severe weather poses and preparing for it is the key to managing weather-related risks. Your employees should know what to do before, during, and after a storm hits. To gauge preparedness and protect your people and business, you should be asking the following questions:

• Do I understand my potential natural-disaster losses and how to mitigate impacts?
• Is there a formal plan in place to manage such risks? How do I inform key stakeholders about policies and procedures?
• Do employees and operations managers know what to do in an emergency?
• How can I continue operations if employees must vacate a facility? How can I determine when it is safe to re-enter?
• How can I manage and minimize the impact on my supply chain?
• What is my post-storm plan?
• Is there a plan in place to effectively communicate with my employees, customers, suppliers, the media, public officials, and the general public?
• Have I established accounting and technical protocols to accurately measure and track the extent of my losses? Can I adequately capture, manage, and report damages?
• Will my current policies sufficiently cover any natural disaster property and casualty claims, including business interruption losses? How can I present my claims to ensure maximum recovery?

To begin to answer these questions, organizations should start with a natural hazards risk assessment to understand the potential impact of severe weather on its business. Computer modeling can be used to analyze and quantify property risks and develop strategies to help mitigate natural hazards.



“Where the hurricane lands is relevant, of course, but it’s going to affect millions of people regardless of where it lands.”
Jeb Bush, Governor of Florida, CNN.com, 8/13/04

Once the risk is properly understood and quantified, organizations should review their business continuity plans and emergency response capabilities to ensure that people know what to do in the event of a storm watch, warning, and emergency — and after the storm hits. Understanding the organization’s insurance assets and being prepared to file claims can also have a significant impact on a company's ability to quickly resume business after a storm hits. It also is critical for companies to effectively communicate with all key stakeholders during natural disasters and other crisis events.

Even if your facilities are not impacted by a storm, your supply chain can be affected by events halfway around the world. You should take steps to identify, quantify, and prioritize critical weather-related risks that may impact your supply network and develop strategies to mitigate the exposure.



"We cannot say exactly when or where it will happen, but climatology will eventually right itself, and we must expect a great increase in land-falling major hurricanes."
William Grey, Colorado State University Associated Press, 5/31/2004




Hurricane season continues until November, so even if your business is spared the effects of Hurricane Charley, it is wise to prepare for not only hurricanes but also other types of severe weather. Although no one can predict when a natural disaster will occur, businesses can protect their people, facilities, and operations by preparing for the worst.

If you have any questions or would like additional information, please contact us.