6 Commonsense Ways to Quantify and Mitigate Flood Risk

By: | March 18, 2020

Dr. Louis Gritzo is vice president and manager of research with FM Global. He oversees a team of scientists specializing in fire, explosions, natural hazards, risk and reliability, and cyber in order to prevent property and business interruption losses. In 2015, he was as an invited panelist in two sessions at the UN World Conference on Disaster Risk Management in Sendai, Japan. He can be reached at [email protected]

Climate risk is dominating leaders’ concerns for the future for the first time, according to this year’s World Economic Forum’s Global Risk Report, which notes “extreme weather” and “failure to mitigate and adapt to climate change” are the most likely risks to watch over the next decade.

For risk managers, that means threats from the environment, such as droughts, floods and wildfires, are expected to have even more impact, as seen in catastrophe-related headlines from the past year.

Additionally, the financial pressure on risk managers and businesses to address these climate threats is expected to continue mounting.

It is the experience of my company, FM Global, that much of the loss from climate risk can be prevented by suitable adaptation measures.

As a nation, the most pressing and perhaps easiest of these risks to address is flooding.

Late last fall, I testified before Congress to urge revision and passage of the Water Resources Development Act of 2020, which would provide funding for the U.S. Army Corps of Engineers to assess and mitigate damage to the nation’s aging levee system.

The American Society of Civil Engineers estimates $80 billion is needed in the next 10 years to maintain and improve the nation’s levees. Yet, the solution is not a simple case of federal funding for federally owned levees or for those owned by states and municipalities that have limited budgets for repair and maintenance.

The U.S. needs a cohesive flood-loss prevention policy for designing, implementing and maintaining regional systems that use a spectrum of combined measures to manage our largest flood-exposed areas. The cost of implementation will be offset by avoided loss and economic stability for flood-prone regions over the longer term.

These solutions will take years to come to fruition and so need to start now.

In the meantime, absent a comprehensive national flood-loss prevention policy, there are steps risk managers can take to protect property from the risk of high water and improve business resiliency.

Quantifying the Risk — Six Questions to Ask

It starts with risk managers asking simple questions:

1) Which properties are exposed?

2) Which parts of each exposed property are threatened?

3) How deep could the water get?

4) What damage would the water do?

5) How much would the damage cost?

6) How much would eliminating or mitigating the risk cost?

Mitigating the Risk — Six Solutions

While locating well outside a flood zone or building on higher ground is always the best solution, it may not be the most practical or cost-effective for many businesses.

For those locations in flood zones, there are temporary flood-loss prevention solutions that will help maintain business value when flooding is imminent. When these solutions have been tested and certified to the American National Standards Institute FM 2510 standard for flood mitigation equipment, users can be confident they will work as intended.

They include:

1) Perimeter barriers: Emergency structures that, when deployed, are intended to protect buildings and equipment from rising water. These temporary perimeter barriers have been evaluated for their ability to control riverine- or rainfall-related flood conditions.

2) Opening barriers: Permanent or temporary devices, such as flexible walls or stackable aluminum gates, that prevent floodwater passage through doors, windows, vents and other openings in a building.

3) Flood mitigation valves: Devices that block floodwaters from entering buildings through overwhelmed drainage systems. These valves prevent buildings from flooding from the inside out or bottom up.

4) Flood mitigation pumps: Devices that remove water already entering buildings or underground passages and can help mitigate damage from corrosion and mold.

5) Penetration sealing devices: Products that are used to seal small openings in a building.

6) Flood glazing: Reinforced glass structures that serve as flood barriers in urban settings.

Using Technology

Addressing flood risk requires informed decision making by risk managers and facility managers.

In that regard, there is a role for current and future advanced technology in improving early flood warning, better responding to floods in progress and improving long-term planning. These improvements include deployment of both on-the-ground and remote sensing at a greater scale, the ability to transfer and openly communicate information, and the ability to allow more innovation in loss prevention products based on increased real-time insight.

Businesses should look to their local, state and federal government authorities as partners in deploying and maintaining these measures.

As employers in the region, businesses have a powerful voice if they use it productively.

Choosing Resilience

While some might see risk transfer via insurance as the solution to flood damage, unfortunately, even the most comprehensive insurance policies fail to cover the total financial loss when flood damage disrupts a business.

A disruption not only affects immediate revenue but also takes a longer-term toll on market share, shareholder value, supply chain integrity, reputation, investor confidence and growth. In the aggregate, these long-term losses to U.S. businesses erode our country’s economic competitiveness.

When it comes to our nation’s flood resilience, the risk for American businesses is real.

Insurance is not enough.

Yet, through science and tested solutions, as well as strong and sustained public-private partnerships, business and government together can better assess risks and develop a national strategy to reduce them, thereby preserving and enhancing U.S. economic competitiveness. &

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

The Betrayal of Elizabeth

In this Risk Scenario, Risk & Insurance explores what might happen in the event a telemedicine or similar home health visit violates a patient's privacy. What consequences await when a young girl's tele visit goes viral?
By: | October 12, 2020
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.


Elizabeth Cunningham seemingly had it all. The daughter of two well-established professionals — her father was a personal injury attorney, her mother, also an attorney, had her own estate planning practice — she grew up in a house in Maryland horse country with lots of love and the financial security that can iron out at least some of life’s problems.

Tall, good-looking and talented, Elizabeth was moving through her junior year at the University of Pennsylvania in seemingly good order; check that, very good order, by all appearances.

Her pre-med grades were outstanding. Despite the heavy load of her course work, she’d even managed to place in the Penn Relays in the mile, in the spring of her sophomore season, in May of 2019.

But the winter of 2019/2020 brought challenges, challenges that festered below the surface, known only to her and a couple of close friends.

First came betrayal at the hands of her boyfriend, Tom, right around Thanksgiving. She saw a message pop up on his phone from Rebecca, a young woman she thought was their friend. As it turned out, Rebecca and Tom had been intimate together, and both seemed game to do it again.

Reeling, her holiday mood shattered and her relationship with Tom fractured, Elizabeth was beset by deep feelings of anxiety. As the winter gray became more dense and forbidding, the anxiety grew.

Fed up, she broke up with Tom just after Christmas. What looked like a promising start to 2020 now didn’t feel as joyous.

Right around the end of the year, she plucked a copy of her father’s New York Times from the table in his study. A budding physician, her eyes were drawn to a piece about an outbreak of a highly contagious virus in Wuhan, China.

“Sounds dreadful,” she said to herself.

Within three months, anxiety gnawed at Elizabeth daily as she sat cloistered in her family’s house in Bel Air, Maryland.

It didn’t help matters that her brother, Billy, a high school senior and a constant thorn in her side, was cloistered with her.

She felt like she was suffocating.

One night in early May, feeling shutdown and unable to bring herself to tell her parents about her true condition, Elizabeth reached out to her family physician for help.

Dr. Johnson had been Elizabeth’s doctor for a number of years and, being from a small town, Elizabeth had grown up and gone to school with Dr. Johnson’s son Evan. In fact, back in high school, Evan had asked Elizabeth out once. Not interested, Elizabeth had declined Evan’s advances and did not give this a second thought.

Dr. Johnson’s practice had recently been acquired by a Virginia-based hospital system, Medwell, so when Elizabeth called the office, she was first patched through to Medwell’s receptionist/scheduling service. Within 30 minutes, an online Telehealth consult had been arranged for her to speak directly with Dr. Johnson.

Due to the pandemic, Dr. Johnson called from the office in her home. The doctor was kind. She was practiced.

“So can you tell me what’s going on?” she said.

Elizabeth took a deep breath. She tried to fight what was happening. But she could not. Tears started streaming down her face.

“It’s just… It’s just…” she managed to stammer.

The doctor waited patiently. “It’s okay,” she said. “Just take your time.”

Elizabeth took a deep breath. “It’s like I can’t manage my own mind anymore. It’s nonstop. It won’t turn off…”

More tears streamed down her face.

Patiently, with compassion, the doctor walked Elizabeth through what she might be experiencing. The doctor recommended a follow-up with Medwell’s psychology department.

“Okay,” Elizabeth said, some semblance of relief passing through her.

Unbeknownst to Dr. Johnson, her office door had not been completely closed. During the telehealth call, Evan stopped by his mother’s office to ask her a question. Before knocking he overheard Elizabeth talking and decided to listen in.


As Elizabeth was finding the courage to open up to Dr. Johnson about her psychological condition, Evan was recording her with his smartphone through a crack in the doorway.

Spurred by who knows what — his attraction to her, his irritation at being rejected, the idleness of the COVID quarantine — it really didn’t matter. Evan posted his recording of Elizabeth to his Instagram feed.

#CantManageMyMind, #CrazyGirl, #HelpMeDoctorImBeautiful is just some of what followed.

Elizabeth and Evan were both well-liked and very well connected on social media. The posts, shares and reactions that followed Evan’s digital betrayal numbered in the hundreds. Each one of them a knife into the already troubled soul of Elizabeth Cunningham.

By noon of the following day, her well-connected father unleashed the dogs of war.

Rand Davis, the risk manager for the Medwell Health System, a 15-hospital health care company based in Alexandria, Virginia was just finishing lunch when he got a call from the company’s general counsel, Emily Vittorio.

“Yes?” Rand said. He and Emily were accustomed to being quick and blunt with each other. They didn’t have time for much else.

“I just picked up a notice of intent to sue from a personal injury attorney in Bel Air, Maryland. It seems his daughter was in a teleconference with one of our docs. She was experiencing anxiety, the daughter that is. The doctor’s son recorded the call and posted it to social media.”

“Great. Thanks, kid,” Rand said.

“His attorneys want to initiate a discovery dialogue on Monday,” Emily said.

It was Thursday. Rand’s dreams of slipping onto his fishing boat over the weekend evaporated, just like that. He closed his eyes and tilted his face up to the heavens.

Wasn’t it enough that he and the other members of the C-suite fought tooth and nail to keep thousands of people safe and treat them during the COVID-crisis?

He’d watched the explosion in the use of telemedicine with a mixture of awe and alarm. On the one hand, they were saving lives. On the other hand, they were opening themselves to exposures under the Health Insurance Portability and Accountability Act. He just knew it.

He and his colleagues tried to do the right thing. But what they were doing, overwhelmed as they were, was simply not enough.


Within the space of two weeks, the torture suffered by Elizabeth Cunningham grew into a class action against Medwell.

In addition to the violation of her privacy, the investigation by Mr. Cunningham’s attorneys revealed the following:

Medwell’s telemedicine component, as needed and well-intended as it was, lacked a viable informed consent protocol.

The consultation with Elizabeth, and as it turned out, hundreds of additional patients in Maryland, Pennsylvania and West Virginia, violated telemedicine regulations in all three states.

Numerous practitioners in the system took part in teleconferences with patients in states in which they were not credentialed to provide that service.

Even if Evan hadn’t cracked open Dr. Johnson’s door and surreptitiously recorded her conversation with Elizabeth, the Medwell telehealth system was found to be insecure — yet another violation of HIPAA.

The amount sought in the class action was $100 million. In an era of social inflation, with jury awards that were once unthinkable becoming commonplace, Medwell was standing squarely in the crosshairs of a liability jury decision that was going to devour entire towers of its insurance program.

Adding another layer of certain pain to the equation was that the case would be heard in Baltimore, a jurisdiction where plaintiffs’ attorneys tended to dance out of courtrooms with millions in their pockets.

That fall, Rand sat with his broker on a call with a specialty insurer, talking about renewals of the group’s general liability, cyber and professional liability programs.

“Yeah, we were kind of hoping to keep the increases on all three at less than 25%,” the broker said breezily.

There was a long silence from the underwriters at the other end of the phone.

“To be honest, we’re borderline about being able to offer you any cover at all,” one of the lead underwriters said.

Rand just sat silently and waited for another shoe to drop.

“Well, what can you do?” the broker said, with hope draining from his voice.

The conversation that followed would propel Rand and his broker on the difficult, next to impossible path of trying to find coverage, with general liability underwriters in full retreat, professional liability underwriters looking for double digit increases and cyber underwriters asking very pointed questions about the health system’s risk management.

Elizabeth, a strong young woman with a good support network, would eventually recover from the damage done to her.

Medwell’s relationships with the insurance markets looked like it almost never would. &


Risk & Insurance® partnered with Allied World to produce this scenario. Below are Allied World’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

The use of telehealth has exponentially accelerated with the advent of COVID-19. Few health care providers were prepared for this shift. Health care organizations should confirm that Telehealth coverage is included in their Medical Professional, General Liability and Cyber policies, and to what extent. Concerns around Telehealth focus on HIPAA compliance and the internal policies in place to meet the federal and state standards and best practices for privacy and quality care. As states open businesses and the crisis abates, will pre-COVID-19 telehealth policies and regulations once again be enforced?

Risk Management Considerations:

The same ethical and standard of care issues around caring for patients face-to-face in an office apply in telehealth settings:

  • maintain a strong patient-physician relationship;
  • protect patient privacy; and
  • seek the best possible outcome.

Telehealth can create challenges around “informed consent.” It is critical to inform patients of the potential benefits and risks of telehealth (including privacy and security), ensure the use of HIPAA compliant platforms and make sure there is a good level of understanding of the scope of telehealth. Providers must be aware of the regulatory and licensure requirements in the state where the patient is located, as well as those of the state in which they are licensed.

A professional and private environment should be maintained for patient privacy and confidentiality. Best practices must be in place and followed. Medical professionals who engage in telehealth should be fully trained in operating the technology. Patients must also be instructed in its use and provided instructions on what to do if there are technical difficulties.

This case study is for illustrative purposes only and is not intended to be a summary of, and does not in any way vary, the actual coverage available to a policyholder under any insurance policy. Actual coverage for specific claims will be determined by the actual policy language and will be based on the specific facts and circumstances of the claim. Consult your insurance advisors or legal counsel for guidance on your organization’s policies and coverage matters and other issues specific to your organization.

This information is provided as a general overview for agents and brokers. Coverage will be underwritten by an insurance subsidiary of Allied World Assurance Company Holdings, Ltd, a Fairfax company (“Allied World”). Such subsidiaries currently carry an A.M. Best rating of “A” (Excellent), a Moody’s rating of “A3” (Good) and a Standard & Poor’s rating of “A-” (Strong), as applicable. Coverage is offered only through licensed agents and brokers. Actual coverage may vary and is subject to policy language as issued. Coverage may not be available in all jurisdictions. Risk management services are provided or arranged through AWAC Services Company, a member company of Allied World. © 2020 Allied World Assurance Company Holdings, Ltd. All rights reserved.

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