Risk Scenario

The Fury of Anais

A major hurricane strikes the Eastern Seaboard, bankrupting a city's hopes of recovery.
By: | September 23, 2014 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

Anais Rising

Buddy Welch, an analyst with the National Hurricane Center at Florida International University in Miami, is finishing his second cup of coffee on the morning of August 22, 2017 as he monitors a tropical wave formation off of the western coast of Africa.

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Buddy looks over to his colleague Jonathan Schell.

“Hey Jon, will you come look at this a second?”

“Sure, what is it?” Schell says before walking over to Buddy’s desk and looking over his shoulder.

“Look at that,” Welch says, pointing to the satellite images on his monitor.

“That’s a very strong wave,” Schell says, watching the evidence of the strong tropical wave moving off of the coast of Africa.

“Could be the strongest thing we’ve seen all summer,” echoes Buddy.

“By far,” the two scientists say at the same time.

“We’ve got very warm water in the Atlantic right now,” Jonathan adds.

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Scenario Partner

He and Buddy continue to monitor the tropical wave for signs of strengthening and possible convection. Forecast models indicate that conditions are ripe for the wave to organize quickly into a tropical storm and thereafter, a hurricane.

The tropical wave does become a tropical storm, dubbed “Anais,” and bolstered by unusually warm ocean water, it intensifies as it moves across the tropical Atlantic toward the Caribbean and the United States.

On August 26, Anais is upgraded to a hurricane in the tropical Atlantic, east of the Eastern Caribbean.

As the hurricane moves through the Caribbean, past Hispaniola, the National Hurricane Center notifies residents and emergency managers up and down the Eastern Seaboard that Anais poses a very real and severe threat.

Several days later, on the 1st, Anais buffets the Bahamas with high winds. It spares the Bahamas a direct hit and instead veers north- northwest and, now classified as a Cat 4, with maximum sustained winds of 150 mph, takes dead aim at the coast of North Carolina.

Ray Bonner, risk manager for the City of Norfolk, Va. is one of those who takes heed.

Bonner immediately convenes Norfolk’s crisis management team, which is more sophisticated than many because it has a “business resilience” subcommittee that is dedicated to coordinating with municipal officials in the event of a natural catastrophe. The committee’s mandate is to help businesses open as soon as possible in the aftermath of a major storm.

“This hurricane could hit every coastal city from Wilmington, N.C. to Boston,” Bonner tells his assembled crisis management team.

“We can’t be sure that we’ll get much help from neighboring emergency responders if that’s the case,” he tells the committee.

On Labor Day, September 4, Anais strikes Wilmington, N.C. as a Cat 4. The storm cripples the Wilmington power grid and causes 13 deaths.

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All Fall Down

Despite the damage done by Anais in Wilmington, Bonner and other members of Norfolk’s crisis management team are frustrated by what they see as a lack of sense of urgency in some quarters to evacuate as necessary and take proper precautions. Perhaps distractions due to end-of–summer Labor Day plans are partially to blame, they reason.

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Well before the hurricane made landfall, Bonner and risk managers from other East Coast cities got on a conference call to discuss the storm’s potential impact and how each city might coordinate with the other to assist in recovery.

“This could end up being every bit as bad as Hurricane Sandy,” said Elizabeth Acres, the risk manager for Boston, Mass.

“Or worse,” said Jay Baker, the risk manager for New York City.

“You ever heard of the Norfolk/Long Island Hurricane of 1821?” Baker says.

“No,” says Acres and others simultaneously.

“I’ll send you the link,” he says. “Path of Anais looks very similar to the path of that 1821 hurricane.”

On September 5, Anais, still a Cat 4, hits Norfolk. Without losing strength, the hurricane continues north, striking Cape May, N.J., New York City and Connecticut in turn.




The storm is every bit as damaging as Hurricane Sandy was, and causes historical levels of wind and flood damage throughout the Washington, D.C. to Boston megalopolis.

Back in Norfolk, Bonner, along with the city’s emergency response coordinator Jim Christopher, is touring flooded sections of the city on September 7 in a zodiac that’s equipped as an emergency response boat.

They’re touring one of the city’s business districts, which is still inundated with three feet of water. The zodiac reaches the end of a block and Christopher eases off on the throttle.

The two men stare at the devastation in the deserted business district in silence. They can see dresses and hats floating, half-submerged in the gray flood waters, through one of the few intact store windows.

“I don’t see when these businesses can re-open,” Bonner says.

“I don’t see when we even get into these shops to have a look at them,” Christopher says.

***

On September 12, Bonner again gets on a conference call with his fellow risk managers from cities in the Northeast. Accompanying them on the call is Ray Harbridge, a Northeast Regional Director for the Federal Emergency Management Agency.

Boston’s Elizabeth Acres leads the dialogue with Harbridge.

“Ray, can you update us on the timeline for any funding assistance we might get from Washington?” Acres says for openers.

“We have no answers in that area Liz,” Harbridge says.

“We’re dealing with an unprecedented level of damage to the six largest cities in the East,” Harbridge said.

“First impressions are that we have millions of people affected,” he said.

“And that’s not even getting into the business impact,” Bonner said.

“That’s correct,” Harbridge said.

“We’ve got to concentrate on housing and medical care for those most vulnerable and those displaced,” he said.

“I know you’ve got plenty of worries on your end, but you’re going to have to rely on your own resources for the foreseeable future. I really don’t know when we see a way clear of all this,” he said.

“Let’s face facts folks,” New York’s Jay Baker said after Harbridge, extremely pressed for time, hung up.

“We still haven’t received federal reimbursement for Hurricane Sandy damage and expenses in some cases, and we’re five years out from that.”

“We’re going to be at this a long time,” Boston’s Acre said.

“You can take that five years from Sandy and double it,” Baker said.

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Bankrupt Hopes

Ever since he heard the first indication from the National Hurricane Center that Anais should be watched, back in late August, Ray Bonner’s mind had been turning on something.

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When Hurricane Sandy struck New Jersey and flooded Lower Manhattan in 2012, it caused a permanent shift in Bonner’s thinking.

Before Sandy, the idea that a major hurricane would come near enough to cause substantial damage in New York was thought to be a “Black Swan” event, something with an extremely low possibility, albeit having potentially devastating consequences.

After Sandy, Bonner began to think about ways to mitigate the costs of a major hurricane strike. He’d begun discussions with the City’s budget director and its finance committee on the possible purchase of layers of reinsurance that could help the city defray not only the costs associated with hurricane clean-up and repair, but the lost property tax and business income tax revenue should the region’s homes and businesses take a big hit.

Presentations Bonner made on the Norfolk/Long Island Hurricane of 1821 to city finance officials left them unmoved, though. It wasn’t that city leaders were callous to Bonner’s concerns. But pressing matters like negotiations with unionized police and firefighters took up most of their attention.

Norfolk’s finances were basically sound. Bonner’s attempts to sway city leaders to a different way beyond floating bonds and raising taxes on the back end in the event of a catastrophe just couldn’t gain any traction. City officials felt that they had things under control and didn’t want to start piling on new expenses like insurance premiums.

Six months after Anais struck, analysts released data that showed the storm caused $40 billion in wind damage and $70 billion in storm surge damage to cities and towns from Wilmington, N.C. to Boston.

What Bonner considered a real threat after Sandy struck turned out to be true after Anais. Norfolk city finances, which had previously been solid, began to deteriorate.

Twenty percent of the Norfolk/Virginia Beach region’s housing stock was rendered uninhabitable by Anais. Reductions in property tax revenue, coupled with business tax revenue reductions, were creating budget deficits in Norfolk and in every other city that was hit by Anais.

That public sector pain was being repeated in the private sector. Loss of mortgage interest and principle payments, a lynchpin of the banking system, led to the failures of dozens of regional banks and severe limitations on the revenue of the larger banks.

In 2021, four years after Anais hit, the Rand Corporation released a study, titled “The Anais Effect” which estimated that the economic damage from Anais restricted growth in the Northeast by seven percent from 2017 to 2021.

Rand Corp. researchers estimated that by 2027, 10 years after the storm, an “Anais Recession” — the first ever regional economic recession connected to a natural catastrophe — would limit growth on an annual basis in the Northeast by five percent.

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Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are Swiss Re Corporate Solutions’ recommendations on urban and corporate resilience, and a reminder about the company’s global expertise in the areas of Nat Cat modeling and disaster preparedness. This perspective is not an editorial opinion of Risk & Insurance®.

The 1821 hurricane struck the mid-Atlantic and Northeast United States at a time in history when human population and concentration of value were dramatically lower than present day. In fact, only 136,000 people lived in Washington and New York at the time. If a major catastrophic event like the 1821 Norfolk Long Island Hurricane was to happen today, it would cause 50% more damage than Sandy and potentially cause more than $100 billion in property losses stemming from wind damage and flooding from storm surge.

That’s just one part of the story, however. Taking into consideration lost tax revenue due to destroyed homes and business, lower real estate values and other economic considerations, the broader economic impact would grow to over $150 billion. That’s well above the aggregate losses of all storms which recently impacted the Eastern United States, including Hurricane Sandy.

With an eye toward a future event that could dwarf Sandy in terms of insured and economic losses, Swiss Re has published a new report that analyzes the 1821 hurricane and how a repeat event would impact the region today. Download the report at: http://media.swissre.com/documents/the_big_one_us_hurricane_web2.pdf

To prepare for such a future event, large scale urban resilience must be at the forefront of the risk management community. Of course, protecting lives should be the highest priority for city authorities seeking to improve their disaster preparedness. Beyond that, municipalities and businesses – large and small – must work together to ensure critical infrastructure and supply chain redundancy. This can be accomplished, in part, by more fully understanding the geographic hazards via advanced modeling techniques using Swiss Re’s CatNet® tool.

CatNet® – Advanced Modeling

Combining satellite imagery with Google MapsTM and Swiss Re’s proprietary historical data, CatNet® allows risk management professionals to analyze worldwide natural hazard exposures. CatNet® features:

  • Natural hazard atlas
  • Country-specific insurance data
  • Disaster statistics

This allows risk managers to prepare local, regional and cross-regional risk profiles to assist management in disaster preparedness. The result is a more informed viewpoint about a company’s or city’s insurance considerations and potential enterprise risk management gaps. An organization’s disaster preparedness can be further enhanced by partnering with local authorities, businesses and municipal leaders to ensure community-wide resilience.




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

More from Risk & Insurance

More from Risk & Insurance

Workers' Comp

Keeping Workers on Their Feet

Slip and fall prevention programs must interweave all of the factors contributing to the risk.
By: | July 6, 2017 • 11 min read

If you peruse the last decade’s worth of literature from the CDC, NIOSH, or numerous other agencies or organizations, you’re bound to come across the “good news” that slips, trips and falls are largely preventable.

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So it’s frustrating, then, that slip, trip and fall injuries consistently account for more than a quarter of all nonfatal occupational injuries, and at least 65 percent of those injuries happen on same-level walking surfaces. And those figures just don’t budge all that much from year to year.

According to the “2016 Liberty Mutual Workplace Safety Index,” falls on same level currently rank as the second highest cause of disabling injuries in the U.S., with direct costs of $10.17 billion, accounting for 16.4 percent of the total national injury burden.

“Not only are they still happening often, but they tend to be very significant injuries,” said Mike Lampl, director of research at the Ohio Bureau of Workers’ Compensation.

“We’ve seen these trends grow over the years,” said Wayne Maynard, product director, risk control, with Liberty Mutual. “Bottom line is, it’s a real, real big problem.”

So why are preventable falls so hard to prevent? This stubborn status quo, say experts, is that the causes of slips and trips are typically far more complex than they seem. There are nearly always multiple factors in play, from footwear and flooring and the interplay of both, to cleaning procedures, lighting, housekeeping, weather, and workers’ mental or physical conditions as well as overall awareness.

And all of these factors are being exacerbated by the fact that incidents often go unreported.

“Slips, falls — people get up, move on, they don’t report it,” said Maynard.

“When somebody’s injured and files a claim — in the workers’ arena, how many are behind the scenes that may have happened that are not reportable? …. The unreported number is considerable in my opinion.”

The key to making any headway in reducing slips and falls on the same surface, say experts, is to have a comprehensive fall prevention plan that addresses all possible factors. No small task.

Engineering Solutions

Flooring conditions are often the most obvious starting point. Ideally, said Maynard, all the right choices are made at the planning and design stage. But sometimes mistakes are made, and in other cases, a business may be inheriting an older space with floor chosen for a different purpose.

Patricia Showerman, senior loss control consultant, Arthur J. Gallagher & Co.

So even flooring in good condition may be the wrong type of material and may not have the necessary coefficient of friction (slip resistance) needed for the work being done.

If companies want to drill down into all the details of the surfaces in their facilities, a friction coefficient study is always an option, said Patricia Showerman, senior loss control consultant at Arthur J. Gallagher & Co.

But if a company doesn’t want to take that step, she said, it may be a simpler matter of saying, “Let’s look at what you’ve got. Let’s look at your floor surfaces and how you’re maintaining them.”

A lot of people want that “shiny grocery store glam look,” she said. “And if you can do it properly, and maintain it properly and keep that coefficient of friction and have the shiny look, that’s great. That’s what everybody wants but how do they get there?”

Certain surfaces may start out with an adequate coefficient of friction when they’re clean and dry. But add even an invisible layer of dust or debris, “and it’s like microscopic little BBs that you slide across,” said Showerman. “So if you have dust on your floor, you are dramatically reducing your slip coefficient.”

For companies that do have flooring surfaces in need of improvement, ripping up the floor and replacing it isn’t typically a feasible option. Fortunately there are more budget-friendly ways to get the maximum slip resistance from existing flooring, such as coatings and etchings.

A coating adds a microscopic layer on top of the flooring that creates a grip surface while maintaining the shine. Showerman likened the effect to the way that Velcro fasteners work.

“You want that hook effect … sharp points are going to microscopically stick into the soles of your shoes, rather than rolling off the top.”

Etching can work in a similar way, chemically altering the existing surface to make it imperceptibly gritty. Etching can also be used to create pores in an existing surface, which is useful for areas such as machine shops, she said.

Be Smart With Surfactants

While keeping floor surfaces clean is one of the best ways to remove slip and fall hazards, cleaning them the wrong way can actually do more harm than good.

Failure to follow appropriate cleaning procedures can severely diminish a surface’s coefficient of friction.

Experts suggest that companies engage with their chemical suppliers, and discuss their flooring as well as the types of dirt or grease removal and disinfectant needs. Detergents – which can contain different types of surfactants — aren’t a one size fits all solution.

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Sometimes purchasers might be inclined to try to cover all their bases by buying the strongest product on the market, but that might mean adding unnecessary surfactants that make surfaces less slip resistant.

“Clearly identify the types of surfaces you’re using it for, the type of oil or dirt or debris you have, and whether or not you need a sanitizing step,” said Showerman.

“You’ve got to find the right balance.”

But that’s only half the battle. A significant problem experts see time and time again is that companies don’t understand how their flooring is being maintained on a day-to-day basis by front-line employees. Failure to follow appropriate cleaning procedures can severely diminish a surface’s coefficient of friction.

“This is where you’re seeing someone with a mop and bucket and they are just re-smearing that grease from one place to another. They put the dirty mop in the dirty bucket, the mop gets full of that emulsified grease and you’re smearing it across the room. In high grease areas, you have to replace with clean water consistently.”

In other cases, a worker without the proper training may grab the first detergent he finds, even if it’s meant for the equipment rather than the floor. Or perhaps he mixes equal parts detergent and water when he was supposed to only use 8 oz. of detergent for every five gallons of water.
Sometimes people will even over-concentrate the detergent on purpose, she added.

Peter Koch, safety management specialist, The MEMIC Group

“I see that in the food industry frequently,” said Showerman. “They find that the more detergent they leave on the floor, the easier it is to clean up next time … but then everyone’s slipping and falling like in a cartoon.”

A company could invest a significant amount in flooring improvements, only to have the benefits undone by improper detergent use or failure to follow recommended rinsing procedures.

It’s incumbent upon safety managers to reinforce that maintaining floor surfaces isn’t just a matter of housekeeping, but a key part of the company’s workplace safety program.

The Human Factor

When you’ve done everything possible to address hazards in the physical work environment, workers themselves remain the wildcard. Most employers routinely include slip and fall hazards in their safety awareness training or toolbox talk programs. But that training should go well beyond a general “watch where you walk” message, say experts.

“One of the most overlooked parts for employee safety is actually employee training,” said Peter Koch, safety management specialist at  The MEMIC Group.

“How do you train an employee to not slip and fall? I think many times that is wrapped in a “you have to be more careful” message, which is valid but nebulous and not very helpful — it means something different to everyone based on your risk tolerance as an individual.”

Koch’s employee training regimen revolves around four elements: surfaces, awareness, footwear and environment (SAFE).

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The first goal of the surface portion is just to get employees to start thinking about the different types of surfaces they walk on and how it can change throughout the work day. Koch said he likes to ask: “How many different types of surfaces did you have to walk on the get to this training room?”

The footwear piece of it is the most straightforward. Are your shoes designed for the work that you’re doing and the surfaces you’re walking on? Are they in good condition? Are the soles worn out?

There is no ASTM standard for measuring the performance of slip-resistant footwear, added Gallagher’s Showerman. So workers should be reminded that wearing the right shoe isn’t a guarantee — it’s just one piece of the solution.

Awareness, said Koch, may be the most challenging piece of the puzzle — helping people to think about their gait, what they’re carrying, what they’re doing, and simply where their heads are at any given moment.

“If you’re thinking about 15 things you have to get done by the end of the day, or you have a particularly challenging employee interaction coming up that day, or you had a fight with your girlfriend last night— or whatever it is — you’re not focused. Then you take that step through the icy patch, and now it relies completely on your athletic ability and luck to stay upright.”

Workers may not necessarily make the connection between personal factors and fall risk. Someone who has an ear infection or is taking certain medications, for example, may not even be aware that their balance might be compromised, putting them at higher risk for a fall.

Employees also should be reminded of how even normal daily stressors can contribute to risk. Everyone is under pressure to deliver more in less time. Everyone is rushing, everyone is stretched to their limits. Add the ever-present cellphone beeping and buzzing and demanding our attention and perhaps it’s a wonder slips and falls don’t happen even more often than they already do.

We’re so conditioned to react when the vibration goes off or the tone chimes in our pockets that we just grab it without thinking, Koch said.

“If you knowingly put yourself at risk by knowingly going quickly through an area with slip and fall exposures, it’s just Russian roulette – at some point you’re going to get broken.” — Peter Koch, safety management specialist, The MEMIC Group.

“Even that, in certain conditions, is going to be enough to put you on the ground.”

Awareness of environmental factors should also be part of the training, Koch said, especially in terms of what workers can’t control, like inclement weather.  He said the main thing he tries to impress upon people is to slow down in a high-risk environment.

“If you knowingly put yourself at risk by knowingly going quickly through an area with slip and fall exposures, it’s just Russian roulette – at some point you’re going to get broken.”

Koch says that getting people to put all of these facets of awareness together is where the training can really click.

The goal is that when they approach an area with a higher-risk surface, employees are thinking “for those few seconds or minutes that I’m going to be walking through it, I need to have a greater sense of awareness, I need to put away the mental [distractions] and focus on what I’m doing – don’t answer your phone, don’t answer your texts.”

Some employers are looking to address the human piece of the slip and fall puzzle by using training that goes far beyond hazard awareness. Active slip-prevention training focuses on body mechanics and teaches workers how to respond when they feel themselves begin to slip.

One such program revolves around the Slip Simulator, technology born of a research partnership between Virginia Tech researchers and UPS. The simulator that creates slippery and hazardous conditions in a controlled environment while participants walk in a harness so they can slip safely. An instructor offers real-time guidance on how to alter their movements to avoid falling.

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After mastering the initial technique, trainees face additional challenges related to their specific work environments, such as walking up ramps or turning wheels. A New Mexico security team practiced drawing firearms while standing on the simulator, which led to a change in how they wear their weapons. Workers at an Ohio refinery practiced stepping over pipes and turning large valves.

Clients of the program are reporting 60 to 80 percent reductions in accident rates.

The Road Ahead

A comprehensive slip and fall prevention plan is a must for employers, experts agreed, with clear, consistent procedures that empower employees to be a part of the solution.

“Employees play a very critical role,” said Liberty Mutual’s Maynard. “If they see a slip risk or a slipperiness issue, they need to be able to report it and they need to be able to get that corrected immediately. They have an important role in maintaining a safe facility and reducing risk themselves — be proactive, don’t walk by, clean it up.

“Any time you can involve the employee in solutions …. the likelihood of success of that intervention is higher.”

Maynard added that the best prevention plans will also be forward-looking.

“Understand where current safety performance is. Then make a roadmap to get better,” he said. “Emphasize where you’re doing well,” then identify opportunities to effect improvement, now and over the next three, four or five years.

“Prevention is too often reactive,” Maynard said. “We’ve got an issue and now what do we do? The goal is for companies to be proactive.” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]