Column: Risk Management

Sizing Disaster

By: | November 1, 2017 • 3 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I write this column in a week following many serious natural disasters — Hurricanes Harvey and Maria and the less discussed Hurricane Nate. It is the impact of Nate, specifically, that I feel personally. I spend much time throughout the year in the beautiful country of Costa Rica.


This week, the tropical storm surges of Nate caused many deaths and left thousands of people, some of them friends and neighbors, desolate.

As of today, many of my friends are still without water, power, roads, bridges and essential services. Rivers exploded from flash flooding and washed their homes and land into the ocean in just a matter of hours.

Worse still, people had to sleep in trees as to not to be eaten by crocodiles, which are now swimming freely in streets and back yards.

The average wage in Costa Rica is about $4 per hour, so the idea of buying insurance is a pipe dream for most and considered a luxury item for the wealthier. Replacing a basic appliance such as a refrigerator will no doubt be a deep financial struggle for the average family and will likely take a few years to repay or procure. It is heartbreaking.

For this reason, I deeply took to heart the words of President Trump when he clumsily compared Hurricane Katrina to Maria and stated one was a “real” disaster as it had more casualties than the other. As awkward as this statement was, it did make me think.

Do we, in our risk management community, have a consistent way of measuring and ranking one disaster over another? Do we have a system that can clearly paint a holistic picture of the full range of impacts in a catastrophe?

The average wage in Costa Rica is about $4 per hour, so the idea of buying insurance is a pipe dream for most and considered a luxury item for the wealthier.

Quick research seems to indicate we often rank disasters using three metrics: number of fatalities, economic loss and insured loss.

At first glance, these sole metrics are deeply inadequate to portray the true impact of such natural disasters.

What of long-term resultant injuries, loss of uninsured habitat, recovery ability and duration, total population affected, gravity and concentration of property damage, crop destruction, and social damage?

There are so many other effects on humans and the environment critical to understand.

With hurricanes in the U.S. accounting for about two-thirds of all insured losses, we have done much in the way of developing sophisticated hurricane tracking and early warning systems. Truly impressive feats.

This work in turn reduced the number of fatalities and assisted in much-improved evacuation planning efforts. But it feels as if we are left blind to the real magnitude and diversity of impacts.


The fundamental difference between disaster management and risk management is that it is emergency and recovery management. Effective emergency management requires us to pre-quantify and properly size all potential damages, losses and post-disaster needs.

Assessing the potential scale and duration of needs before the return to normalcy and re-establishment of basic services is essential for meaningful disaster planning and budgeting.

I see a need to better aggregate data that measures true diversity of disaster impacts to assist us in future planning.

I would like to see the development of some form of universal disaster index with clear classifications, which has the means of describing disasters in a multidimensional and unified way. Only with that will insurers, communities, responders, government and the public really stand to gain. &

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Pinnacle Entertainment’s VP of enterprise risk management says he’s inspired by Disney’s approach to risk management.
By: | November 1, 2017 • 4 min read

R&I: What was your first job?

Bus boy at a fine dining restaurant.

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

I sent a résumé to Harrah’s Entertainment on a whim. It took over 30 hours of interviewing to get that job, but it was well worth it.

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


The Chinese citizen (never positively identified) who stood in front of a column of tanks in Tiananmen Square on June 5, 1989. That kind of courage is undeniable, and that image is unforgettable. I hope we can all be that passionate about something at least once in our lives.

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

Cyber risk, but more narrowly, cyber-extortion. I think state sponsored bad actors are getting more and more sophisticated, and the risk is that they find a way to control entire systems.

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

Training and breaking horses. When I was in high school, I worked on a lot of farms. I did everything from building fences to putting up hay. It was during this time that I found I had a knack for horses. They would tolerate me getting real close, so it was natural I started working more and more with them.

Eventually, I was putting a saddle on a few and before I knew it I was in that saddle riding a horse that had never been ridden before.

I admit I had some nervous moments, but I was never thrown off. It taught me that developing genuine trust early is very important and is needed by all involved. Nothing of any real value happens without it.

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


Setting very aggressive goals and then meeting and exceeding those goals with a team. Sharing team victories is the ultimate reward.

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

Disney World. The sheer size of the place is awe inspiring. And everything works like a finely tuned clock.

There is a reason that hospitality companies send their people there to be trained on guest service. Disney World does it better than anyone else.

As a hospitality executive, I always learn something new whenever I am there.

James Cunningham, vice president, enterprise risk management, Pinnacle Entertainment, Inc.

The risks that Disney World faces are very similar to mine — on a much larger scale. They are complex and across the board. From liability for the millions of people they host as their guests each year, to the physical location of the park, to their vendor partnerships; their approach to risk management has been and continues to be innovative and a model that I learn from and I think there are lessons there for everybody.

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

We are doing a much better job of getting involved in a meaningful way in our daily operations and demonstrating genuine value to our organizations.

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

Educating and promoting the career with young people.

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

Being able to tell the Pinnacle story. It’s a great one and it wasn’t being told. I believe that the insurance markets now understand who we are and what we stand for.

R&I: Who is your mentor and why?


John Matthews, who is now retired, formerly with Aon and Caesar’s Palace. John is an exceptional leader who demonstrated the value of putting a top-shelf team together and then letting them do their best work. I model my management style after him.

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

I read mostly biographies and autobiographies. I like to read how successful people became successful by overcoming their own obstacles. Jay Leno, Jack Welch, Bill Harrah, etc. I also enjoyed the book and movie “Money Ball.”

R&I: What is your favorite drink?

Ice water when it’s hot, coffee when it’s cold, and an adult beverage when it’s called for.

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

In my family, I’m the “Safety Geek.”

R&I:  What’s your favorite restaurant?

Vegas is a world-class restaurant town. No matter what you are hungry for, you can find it here. I have a few favorites that are my “go-to’s,” depending on the mood and who I am with.

If you’re in town, you should try to have at least one meal off the strip. For that, I would suggest you get reservations (you’ll need them) at Herbs and Rye. It’s a great little restaurant that is always lively. The food is tremendous, and the service is always on point. They make hand-crafted cocktails that are amazing.

My favorite Mexican restaurant is Lindo Michoacan. There are three in town, and I prefer the one in Henderson as it has the best view of the valley. For seafood, you can never go wrong with Joe’s in Caesar’s Palace.

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