2017 was an
extremely active
year for hurricanes
with Harvey, Maria
and Erma causing
widespread
devastation.
It was also the most
expensive year for
natural disasters
in the U.S.
with total damage
exceeding
300 billion dollars.
Although they
generate some new
activity by way of
preparation and
recovery, natural
disasters cause a
net loss of wealth.
Last year consumer
spending saw a
slight uptick in
fuel, groceries and
home expenses before
the hurricanes
but spending on services
like healthcare
dropped dramatically
the week of landfall
and remained
depressed for weeks
after the storm.
Certain regions and
industries may be
more prone to damage
from hurricanes like
oil and gas
companies in the gulf.
But as we saw last
year in Houston and
California there are
no guarantees, even
in areas rarely
hit by
natural disasters.
No matter where
business is located,
they may be impacted
by more than just
property damage or
lost inventory.
Employees are a
company's biggest
vulnerability and
they can be its
hardest hit due
to infrastructure
breakdowns, home damage, or loss of
key service locations like banks
and grocery stores.
From an economic standpoint, there's
a big difference
between the goods
sector and the
services sector.
For services, the
lost opportunity
cost from natural
disasters can never
be recouped;
businesses
can just hope to
return to where
they were.
In the goods sector
businesses can
compensate
for lost time.
Since broad economic
indicators account
for both goods
and services, the
effects of storms
aren't always
visible even when
they're devastating
to communities.
Ultimately, the
faster communities
and businesses can
get back on their
feet the less
everyone will suffer
from missed economic
opportunity.
Recovering from a
natural disaster
starts with having
a contingency plan
before it strikes.
Businesses should
ask themselves
questions like,
"Have we formed an
emergency
management team?"
and "Do we
have a thorough
understanding of our
insurance coverage
for disaster
recovery?"
Having a backup
office location is
only helpful if it's
fully operational
and tested.
Does the location
have an alternate
power source and
backup supplies?
Additionally,
business
interruptions can be
caused by anything
from illnesses, to
cyberattacks,
to protests.
And having a
contingency plan is
something
organizations should
consider all the
time, not just at
the height of
hurricane season.
