The 2004 hurricane season, which produced 15 storms, caused extensive damage to Haiti, Grenada, Jamaica, the Cayman Islands, and Florida. Given the lessons learned during the 2004 hurricane season, combined with the predictions for this year, businesses should not underestimate the impact a storm can have on their operations, whether they are in its path or not.

Before a storm hits, businesses need to consider pre-loss actions such as developing business continuity and crisis management plans, establishing internal and external communications procedures, putting in place and testing emergency response plans, assessing the resilience of the supply chain, instituting data back-up and recovery protocols, evaluating levels of insurance coverage, and creating post-loss claims accounting and filing systems.



"Department of Homeland Security Under Secretary and head of the Federal Emergency Management Agency Michael D. Brown said more homeowners, renters and business owners need to know how to prepare for flooding. …Brown urged Americans to take steps now to protect their property against tropical storm flooding.”
Insurance Journal, 5/31/2005

Understanding the potential impact uncontrollable severe weather such as hurricanes can have on your business, 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? Have crisis scenarios been reviewed and response plans tested?
• 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?
• Have I established procedures to back up and/or recover digital data that could be lost during a storm? Do I know what expert resources I can call upon when data recovery is required?
• 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, an organization 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.

Once the risk is properly understood and quantified, an organization should review its business continuity plans, emergency response capabilities, and crisis management plans 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 a company to communicate effectively with all key stakeholders during natural disasters and other crisis events, and thus have procedures and policies in place to ensure that communication with employees, government officials, and other audiences occurs in a timely manner at all stages of an incident.



Seven to nine of [the predicted 2005] storms will become hurricanes, and three to five of the hurricanes will be major ones, with sustained winds exceeding 110 miles per hour, the agency said. An average hurricane season has 9.6 tropical storms, of which 5.9 grow to hurricane strength of 74 miles per hour. Of those hurricanes, 2.3 become major hurricanes.
Boston Globe, 5/17/2005

Just as importantly, given the information age in which we live, a business needs to consider what digital data to store on and off premises as well as how it can recover that data if there is a significant power problem or damage to facilities in which computers and servers are located. If the damaged computers are not handled properly, valuable information that could aid with business recovery could be lost.

Even if your facilities are not impacted directly by a storm, your supply chain can be affected by events across the country or 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.

Hurricane season continues from June until November. Even if your business was spared the effects of Hurricanes Charley, Ivan, and Jeanne and Tropical Storm Bonnie in 2004, it is wise to prepare for the 2005 season's storms. Although no one can predict when, where and with what intensity a weather-related incident will strike, businesses can protect and preserve their people, facilities, and operations by being best prepared for the worst.

You may not be able to control the weather. But you can control the impact it has on your business.

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