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When weather makes the headlines, it’s not typically due to temperate or mild conditions. In the past year, the media re- ported on tornadoes, earthquakes and hurricanes that have signifi cantly impacted businesses and communities nationally and internationally.

In a report to Congress several years ago, the General Ac- counting Offi ce (GAO) tracked what it identifi ed as the four most costly types of catastrophic perils in the United States: earthquakes, hurricanes, tornadoes and hailstorms. Mapping the combined fi nancial impact of these perils, the GAO report turned an illustration of the country into a colorful warning about the highest risk areas (see map below).

It is important to recognize that despite signifi cant weather events in some parts of the country, weather does not have to be on a grand catastrophic scale to potentially cause havoc for a specifi c business. A blizzard may shut down roads and bring electricity to a halt for several days; a fl ash fl ood could dam- age docks and equipment on a riverfront; a lightning strike may hit a building and touch off a fi re; an ice storm can cause roofs to collapse; high winds can knock out power lines; and a heat wave may bring on rolling brownouts and threaten out- door crews with dehydration. Any of these localized weather events that catch a business unprepared can be both disruptive and costly.

Weather on the Waterfront

It’s a message that rings true for the maritime industry, which throughout the centuries of its existence has been at the mercy of foul weather. Despite advances in forecasting and understanding natural events, weather can be just as unrelent- ing a foe in modern times as it was when ships worried about sailing off the edge of the earth and into the sea of monsters that lay beyond.

Maritime professionals who plan ahead and stay prepared know they have the best chance of limiting weather-related risks to their business. By working with their insurance agent and taking advantage of risk management resources that may be offered by their insurance company, a maritime business can be prepared to sail through the worst storms.

A Three-Step Strategy

Although the specifi c content of a plan may vary depending on the business, the general approach is similar for most busi- nesses. The following is a three-step strategy for coping with weather-related events: 1. Prepare: Assess your business and understand the key components that are critical to how you function and serve your customers. Think in advance about what actions you would need to take and who you would have to notify if weather shut down your business both short and long term.

Are there supplies you need to have on hand in the event of an emergency? Are there specialists you would need to bring in to get up and running after a business interruption?

How would you keep operating, and in the event that you could not carry on in the way your business normally does, what could you do to preserve your relationships with cus- tomers? By looking at each part of your business, analyzing the steps you would need to take, and putting together a plan of action, you can best prepare for whatever weather- related event occurs. 2. Respond: The catastrophe is fast-approaching and the time for you to respond is limited. First, ensure that hu- man life is protected; take action to keep employees safe, whether it is sending them home or getting them to a secure location. Second, protect your physical assets to the extent possible. Tie down equipment, secure vessels, cover win- dows, sink dry docks, etc. You should not have to scramble for supplies and protective equipment at this late date when the crisis is upon you because of your earlier analysis and advance planning. If Step One was implemented correctly, following the plan of action you created to prepare for this event should carry you safely through Step Two. 3. Recover: The storm has passed; the physical danger is now behind you. But recovery is still an issue because roads may be closed, river navigation may be impossible,

Insurance

WEATHER

Planning Ahead

Preparing to Weather Any Storm; Big or Small.

I

By Ken Baldwin and Kord Spielmann

GAO report illustrating high risk areas 16 I Maritime Professional I 2Q 2012

MP #2 1-17NEW STYLES.indd 16 5/4/2012 4:55:38 PM