Every U.S dollar a business spends on hurricane protection reduces loss exposure by an average of US$105. That’s based on a recent analysis by FM Global, a global commercial and industrial property insurer that is based in Johnston, RI.
“Businesses often wonder if they are getting a good return when they invest in preventing hurricane-related wind and flood damage,” said Brion Callori, senior vice president, engineering and research manager for FM Global. “This analysis has yielded a pretty convincing answer. And the 1-to-105 ratio doesn’t even reflect the business repercussions of a major hurricane loss such as damage to reputation, market share, and shareholder value.”
To arrive at the ratio, FM Global tallied an estimate for over 10,000 wind and flood related investments and their associated reduction in property loss and business disruption exposure for 1,800 clients around the world from 2008 to 2017. These estimates are calculated based on actual losses that have occurred at tens of thousands of properties insured by FM Global.
Cost-effective prevention is worth considering as the 2018 hurricane season is in full swing, and in preparing for the 2019 hurricane season. FM Global advises businesses in hurricane-prone areas to expect a one-two-punch of wind and water.
To help minimize the effects of costly wind damage, organizations should have backup power generators ready, rooftops inspected and secured, doors braced, windows covered, and vulnerable objects put away or strapped down, including rooftop equipment and solar panels.
FM Global also advises that businesses can prevent costly flood damage by elevating or sealing off valuable equipment, fastening storage tanks, inspecting fire protection equipment, and preparing to turn off utilities. Flood protection products that meet rigorous certification testing standards can reduce the need for sandbags.
Any business exposed to flood risk should invest in developing and practicing a flood emergency response plan (FERP). Facilities with well-organized flood emergency response plans have nearly 70% less damage, and resume operations sooner than those with no plan or an inadequate one, FM Global loss history has shown.
For additional information on preparing for hurricanes and other natural hazards, visit FM Global’s Nathaz Toolkit page.