Disasters Leave a Toxic Tail

Following a natural disaster, toxic materials released by the storm waters wreak havoc on the environment and public health.
By: | April 9, 2018 • 5 min read

The year 2017 was a bad year for named storms. Hurricanes Harvey, Irma and Maria caused widespread property damage and loss of life. While refineries and chemical plants were secured, pollution and contamination from agricultural and pool chemicals as well as fuels and lubricants could be seen far and wide.


“Since the Murphy Oil release during Hurricane Katrina, heavy industrial facilities at risk have developed stronger preparedness and storm contingency plans,” said Marcel Ricciardelli, senior vice president of environmental, design, professional and surety, Allied World.

“A single major release can result in extensive damage.”

While no Murphy Oil-scaled events occurred, 2017 saw tank roof collapses, fires and explosions, air pollution releases, spills and waste site flooding. To add historical context, Hurricane Sandy, which hit in 2013, resulted in similar types of releases from flooded vehicles and underground/aboveground storage tanks.

“Major changes in building codes or government regulations would likely be needed to harden small businesses, commercial buildings, homes and vehicles,” said Ricciardelli. “The key question is whether the cost and effort would help to reduce releases significantly.”

He added, “I believe that it has been most effective to plan for worst-case scenarios, using preparation time to remove hazardous materials and to develop contingencies for critical services. Unfortunately, there is a lack of predictability with regard to weather intensity and flooding.”

Planning for Contaminants

Flooding is a broad peril with the ability to move pollution.

“Without the ability to prevent flooding, it is difficult to prevent possible contamination from flood waters,” said Ricciardelli. “Flood water can be contaminated from sewage overflows, waste sites, releases from mechanical systems, energy infrastructure and materials in the chain of commerce.”

Marcel Ricciardelli, senior vice president of environmental, design, professional and surety, Allied World

Given that reality, “property owners should understand that contingency plans should be developed to include assistance from emergency response firms and the possible use of environmental insurance as part of their risk management plan. An environmental insurance policy may provide coverage for the clean-up of pollution that migrates from off-site sources.”

Most substantial industrial facilities have management and emergency response plans in place that are required.

“For facilities with aboveground tanks, storm surges and flooding are significant concerns for tank failures,” said Eugene Wingert, environmental manager, Chubb Risk Engineering Services. “Debris generated from a storm can also damage tanks. A facility’s contingency plan should anticipate methods that protect tanks from surges, flooding or floating debris.”

“You can debate the causes, but there is no debate on the effects. We are getting greater levels of severity in weather events.” — Robert Horkovich, managing partner, Anderson Kill

Unexpected conditions can lend themselves to toxic repercussions.


“For example, in the case of the Arkema plant, the fire and environmental damages were the result of the loss of back-up generators,” Wingert noted. “The loss of power impacted the ability to cool the storage areas, and chemicals within these areas reacted at the higher temperatures.”

Speaking broadly, he added, “Conditions such as storm surge, flooding, winds are all perils that may exacerbate the release of toxic chemicals into the atmosphere causing third-party exposure, bodily injury, water-supply infiltration, air exposure and provoke the need for remediation.”

Continued disaster preparation becomes more important as climate change worsens.

“You can debate the causes, but there is no debate on the effects,” said Robert Horkovich, managing partner at the law firm of Anderson Kill. “We are getting greater levels of severity in weather events. Even in 2016, which was not a bad year for hurricanes, we saw batteries of dozens of hurricanes running through a state.”

As local officials increase their efforts and preparation, they are also looking at prevention. There has been some discussion of limiting reconstruction in flood zones, but it’s easier said than done.

“This is a complex question,” said Ricciardelli. “In many cases, individuals or companies can rebuild subject to zoning requirements or building codes. Building in a flood zone may come with increased building requirements and additional insurance costs.”

The combination of building codes and increased costs may prevent those with limited resources from rebuilding without government support.

Similarly, with new flood zones, consideration of revising drainage systems is taking place. Again, not so simple. Funding would be necessary to construct flood prevention and draining systems, and their effectiveness would be based on predictability.

“I believe that these types of systems would only be suitable for chronic flooding areas and can only handle situations within their design parameters,” said Ricciardelli.

“The damage from Hurricane Harvey, like Katrina, would likely not have been in anyone’s design parameters. The flooding from Harvey was caused, in part, by reservoir releases that were needed to prevent dam collapse.”

A Public Health Concern

One politically charged issue, long-tail health concerns, is not as much of a liability problem as it might seem; “Our environment has pollution from our industrialization,” said Ricciardelli.

“It is difficult to say whether the additional pollution released from a catastrophic weather event creates long-term effects beyond the chemicals and pollutants we add every day.”

He explained that “the air quality deteriorated after Harvey due to pollution from the industrial facilities in the Houston area. The air quality today is very similar to air quality prior to the storm. Consistent poor air quality is a public health issue. I believe it is unlikely the spike after a storm would result in a larger public health crisis in the long term.”

“It is difficult to say whether the additional pollution released from a catastrophic weather event creates long-term effects beyond the chemicals and pollutants we add every day.” —Marcel Ricciardelli, senior vice president of environmental, design, professional and surety, Allied World

A significant pollution event is easier to evaluate due to gross contamination within a finite area.


“Gross contamination is more likely to cause a public health crisis,” Ricciardelli added, “which would be handled by removing individuals from the exposure and potentially making the affected area uninhabitable for an extended period.”

Horkovich stressed the importance of business interruption insurance: “I have had cases where a client was surrounded by a moat of flood waters. There was no damage to their facility, but they were unable to operate, because they could not get raw materials in or finished goods out.

“I have many clients that are chemical and oil companies,” Horkovich continued. “My advice to them is always do what you need to do to protect your facilities and your company. You can get insurance but also make it so that no one can fault your company or your management when bad things happen.” &

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

As a professor of business, Jack Hampton knows firsthand the positive impact education has on risk managers as they tackle growing risks.
By: | April 9, 2018 • 4 min read

R&I: Who is your mentor and why?

Ellen Thrower, president (retired), The College of Insurance, introduced me to the importance of insurance as a component of risk management. Further, she encouraged me to explore strategic and operational risk as foundation topics shaping the role of the modern risk manager.

Chris Mandel, former president of RIMS and Risk Manager of the Year, introduced me to the emerging area of enterprise risk management. He helped me recognize the need to align hazard, strategic, operational and financial risk into a single framework. He gave me the perspective of ERM in a high-tech environment, using USAA as a model program that later won an excellence award for innovation.

Bob Morrell, founder and former CEO of Riskonnect, showed me how technology could be applied to solving serious risk management and governance problems. He created a platform that made some of my ideas practical and extended them into a highly-successful enterprise that served risk and governance management needs of major corporations.

R&I: How did you come to work in this industry?


From a background in corporate finance and commercial banking, I accepted the position of provost of The College of Insurance. Recognizing my limited prior knowledge in the field, I became a student of insurance and risk management leading to authorship of books on hazard and financial risk. This led to industry consulting, as well as to the development of graduate-level courses and concentrations in MBA programs.

R&I: What was your first job?

The provost position was the first job I had in the industry, after serving as dean of the Seton Hall University School of Business and founding The Princeton Consulting Group. Earlier positions were in business development with Marine Transport Lines, consulting in commercial banking and college professorships.

R&I: What have you accomplished that you are proudest of?

Creating a risk management concentration in the MBA program at Saint Peter’s, co-founding the Russian Risk Management Society (RUSRISK), and writing “Fundamentals of Enterprise Risk Management” and the “AMA Handbook of Financial Risk Management.”

A few years ago, I expanded into risk management in higher education. From 2017 into 2018, Rowman and Littlefield published my four books that address risks facing colleges and universities, professors, students and parents.

Jack Hampton, Professor of Business, St. Peter’s University

R&I: What is your favorite book or movie?

The Godfather. I see it as a story of managing risk, even as the behavior of its leading characters create risk for others.

R&I: What is your favorite drink?

Jameson’s Irish whiskey. Mixed with a little ice, it is a serious rival for Johnny Walker Gold scotch and Jack Daniel’s Tennessee whiskey.

R&I: What is the most unusual/interesting place you have ever visited?

Mount Etna, Taormina, and Agrigento, Sicily. I actually supervised an MBA program in Siracusa and learned about risk from a new perspective.

R&I: What is the riskiest activity you ever engaged in?


Army Airborne training and jumping out of an airplane. Fortunately, I never had to do it in combat even though I served in Vietnam.

R&I: If the world has a modern hero, who is it and why?

George C. Marshall, one of the most decorated military leaders in American history, architect of the economic recovery program for Europe after World War II, and recipient of the 1953 Nobel Peace Prize. For Marshall, it was not just about winning the war. It was also about winning the peace.

R&I: What about this work do you find the most fulfilling or rewarding?

Sharing lessons with colleagues and students by writing, publishing and teaching. A professor with a knowledge of risk management does not only share lessons. The professor is also a student when MBA candidates talk about the risks they manage every day.

R&I: What is the risk management community doing right?

Sensitizing for-profit, nonprofit and governmental agencies to the exposures and complexities facing their organizations. Sometimes we focus too much on strategies that sound good but do not withstand closer examination. Risk managers help organizations make better decisions.

R&I: What could the risk management community be doing a better job of?


Developing executive training programs to help risk managers assume C-suite positions in organizations. Insurance may be a good place to start but so is an MBA degree. The Risk and Insurance Management Society recognizes the importance of a wide range of risk knowledge. Colleges and universities need to catch up with RIMS.

R&I: What emerging commercial risk most concerns you?

Cyber risk and its impact on hazard, operational and financial strategies. A terrorist can take down a building. A cyber-criminal can take down much more.

R&I: What does your family think you do?

My family members think I’m a professor. They do not seem to be too interested in my views on risk management.

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]