Risk Insider: Jon Hall

A Rising Tide

By: | June 22, 2017 • 3 min read
Jonathan W. Hall is chief operating officer at FM Global. He oversees FM Global’s insurance operations and insurance staff functions, as well as the FM Global Resilience Index, a data driven resource that ranks the business resilience of 130 countries and regions. He can be reached at [email protected]

Earthquakes. Tropical cyclones. Snow. Flooding. Of all the natural hazards, studies show that flood is the most expensive. According to a report published by Aon Benfield in 2016, flooding was the costliest overall peril for the fourth consecutive year, at $62 billion.

Our world’s climate is changing, and some weather patterns are shifting. Due to the rise in world population, a rise in value at risk, increasing vulnerability due to globalization, and the rapid development of emerging markets which are less resilient, property loss from natural catastrophes has been, and will continue to be, ever more costly.

Many businesses are questioning if they’re doing enough to prepare for and adapt to these catastrophes. But just how should businesses plan to stem the rising tide? Of all the natural disaster losses, flood loss can be both the most predictable and the most preventable, so armed with clear information, businesses can take action to protect their value.

The most obvious action is to locate far from low-lying river, coastal or other flood-prone areas. If that isn’t possible, however, there are some proactive steps businesses can take to reduce their risk of potential flood damage and business interruption.

Among the preparations businesses can take to reduce the impact of flood is permanently moving all electrical, computer and telecommunications equipment safely out of low-lying interior and outside areas to settings above the flood level.

Flood preparation and awareness are key. Facilities located within high-hazard flood zones will eventually experience major flooding. In addition, FM Global has always recommended that clients not build in moderate-hazard (500-year flood-exposed) areas. In fact, in many areas around the world, building codes and regulations now call for critical infrastructure occupancies, such as utilities, emergency services, schools and hospitals, to build higher or protect against the 500-year flood level.

Nearly one in 10 commercial facilities are already located within a flood zone, and the best loss prevention practice for these properties is unremitting vigilance. While there is no way to prevent a flood from occurring, businesses can enhance their resilience by preparing for whatever precipitation extremes could occur. This can’t happen, however, without a contingency plan. Without a plan, buildings, machinery, data centers, transportation networks, supply chains, employees and customers are all at risk.

Facilities at risk for flooding must prepare well in advance to keep water out of business-critical areas to limit downtime and service interruptions. Smart businesses have a clear plan for what they will do when flooding is imminent, including choosing the best location for their flood barriers, sealing walls and floors, and providing flood pumps and other mitigation equipment that will help maintain business continuity.

Among the preparations businesses can take to reduce the impact of flood is permanently moving all electrical, computer and telecommunications equipment safely out of low-lying interior and outside areas to settings above the flood level.

FM Global’s recently released interactive Global Flood Map presents business executives with a powerful strategic planning tool, and risk managers with a way to address potential flood exposure around the world. Built using hydrology and hydraulic science, the Global Flood Map considers, among other factors, essential information like rainfall, evaporation, snowmelt and terrain. A version of the map is available for use by businesses and the public at no cost.

The map can help users determine whether their business locations reside in a potential flood zone by simply typing in physical addresses. The map identifies potential 100 year flood zones — highlighted in pink — and potential 500-year flood zones highlighted in yellow. The term 100-year flood exposure can be misleading. Over the 30-year life of a facility (or a risk manager’s career), there is a one in four chance your facility will flood if it is located in a 100-year flood zone, and a one in six chance if it is located in a 500-year zone.

Knowing their unique flood risk helps prepare businesses to implement the best solutions for when a disaster strikes, and gives them the opportunity to stem the rising tide.

More from Risk & Insurance

More from Risk & Insurance

2018 Power Broker

To the Ends of the Earth

From the frozen Arctic to the inferno of a high net worth divorce, Power Brokers go to extremes to find solutions for their clients.
By: | February 20, 2018 • 2 min read

Looking for the Power Broker Winners? Click Here.

Picture this: A bitter divorce so heated that the principals are only communicating through their attorneys. Then their house burns down. Imagine walking into that situation and trying to find solutions that will please both parties.

But that’s exactly what 2018 Power Broker® Jeff Kaplan, family office practice leader, Risk Management Strategies, did.

Kaplan, who won in the Private Client category, negotiated the sale of the property — forget the rebuild, let the new owner take that on, he counseled his clients — orchestrated a 30-day auction for its sale, and achieved a profitable result for every party in the transaction, each half of the feuding couple and the developer of the sold property.

To the client, Kaplan’s work, including his high degree of emotional intelligence, released him from the “seventh circle of hell.”

From that doused inferno, let us now cast our eyes to the frozen north.

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The owner of a barge learned their property sank off of Nome, Alaska, (average temperature 27 degrees Fahrenheit). With an approaching freeze threatening to seal off the harbor, the owners, Phoenix Marine, risked losing valuable equipment.

Into action sprang George Andersen, a 2018 Power Broker® in the Marine category. With precious little time to lose, Andersen negotiated the claim and communicated proactively with the U.S. Coast Guard and other officials. Then he commissioned salvage divers from New York to travel to Alaska and retrieve the valuable equipment from the sunken barge.

Before we depart the Arctic, let us consider another 2018 Power Broker® from Aon, Christian Wise. To arrange cover for a defense contractor’s radio installations in a remote Arctic location, Wise dispatched a loss control engineer, complete with instructions on the use of a shotgun should polar bears interlope in temperatures that registered negative 29 degrees Fahrenheit.

One of the radio installations had already burned to the ground due to scant local fire protection, culminating in a $20 million loss. Despite that, working with London underwriters, Wise and his team were able to shave $1.3 million off an initial property premium cost of $1.8 million.

Power Brokers are judged by a team of Risk & Insurance® editors and writers over a three-month period each year. After interviews with hundreds of sources, winners are picked for their creativity and resourcefulness, their excellent customer service and their industry knowledge.

Not every Power Broker® required one of their associates to tote a shotgun. But many of them went to extremes for their clients; some of them waded into hurricane ravaged neighborhoods to document damage; others put their personal lives on hold, including one Power Broker® who delayed his honeymoon to attend a meeting on behalf of his client.

This year, 158 Power Broker® winners were chosen, as well as 55 finalists, spanning 25 industry categories. Congratulations to every one of these exceptional individuals. Click here to begin reading the profiles of this year’s winners. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]