62% of Companies Surveyed Lacked Hurricane Prep in 2017

This post first appeared on Risk Management Monitor. Read the original article.

A majority of senior executives of large U.S. companies with operations in Texas, Florida or Puerto Rico admit to being unprepared for last year’s hurricanes that devastated their communities, according to a survey by FM Global. While 64% of respondents said the hurricanes had an adverse impact on their operations, a full 62% said they were not fully prepared.

“These candid admissions drive home a fundamental truth about catastrophe,” Louis Gritzo, vice president and manager of research at FM Global said in a statement. “People routinely fail to understand or acknowledge the magnitude of risk until they’ve experienced a fateful event.”

One reason for a lack of natural-hazard preparation is imprecise terminology, he said. Being located in a “100-year flood” zone, for example, “does not mean you have 99 years to plan—but that there is a 1% chance of such a flood every year.” Another reason for insufficient preparation is over-reliance on insurance, which cannot restore the market share, brand equity and shareholder value lost to competitors.

The study found that as a result of hurricanes Harvey, Irma and Maria:

• 57% of all respondents said they will put in place or enhance their business continuity or disaster recovery plans.
• 40% plan to invest more in risk management, property loss prevention, and/or reassess their supply chain risk management strategy.
• 25% will reassess their insurance coverages or their insurers.