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3 weeks ago

2024 is set to be one of the most active hurricane seasons: What can businesses do to prepare?

Hurricanes can be hugely damaging to businesses. As extreme weather becomes more frequent, it is increasingly hard for businesses in regions that are prone to this type of natural weather pattern to get adequate insurance to protect their business. So, what can you do?

As we consider the complexities of hurricane season and its implications, it becomes clear that preparing for these natural catastrophes is paramount for any organization. Risk Managers in regions such as the US will be all too aware of this situation, and while most storms have minimal impact, being prepared for Category 3 status or stronger is essential.  

Colorado State University’s tropical meteorology project team is forecasting 23 storms in 2024, 11 of which will become hurricanes and five of which will reach Category 3 status or stronger.  

This year is set to be particularly active as the Atlantic has hit record temperatures, and the deeper and warmer the ocean is, the stronger hurricanes can become. In addition, NOAA’s Climate Prediction Center is forecasting the current El Niño to dissipate and become La Niña by the peak of the hurricane season. 

La Niña hurricane seasons have less wind shear, meaning they aren’t as effective for disrupting storms and breaking them up. Rising and unstable air can also cause thunderstorms—the building blocks for tropical storms and hurricanes. Hence, La Niña could cause conditions to escalate.  

With all of this in mind, how can hurricanes affect businesses, and what strategies can companies implement to mitigate these risks effectively?

1. Understanding Hurricane Risk

Hurricanes bring with them the potential for extensive damage to property and infrastructure, posing a threat to businesses in affected regions. This risk is amplified during the hurricane season, which demands heightened awareness and preparedness from businesses operating in vulnerable areas. 

2. Assessing Hurricane Damage and Risk Exposure 

An essential aspect of hurricane risk management is assessing potential damage and understanding the extent of risk exposure. Through comprehensive hurricane risk assessments, businesses can identify vulnerabilities in their operations and develop targeted strategies for risk mitigation.  

Sigma7’s risk engineering solution can support you with risk assessments and predictive maintenance, helping to mitigate risks to your properties before they occur.  

However, the aftermath of a hurricane can cause long-lasting damage and business interruption that can have a negative impact on businesses’ reputations. Crisis management responses are required to deal with the situation effectively and safely. Utilities can be impacted during storms, meaning facilities may be without power and water for days after, and food and water supplies can become contaminated. Roads and travel infrastructure can be disrupted for long periods of time, meaning deliveries may have to be rerouted, and stock and assets in warehouses or in transit can also be damaged. All of this leads to financial losses that can mount up quickly. 

3. Developing a Business Continuity Plan 

A robust business continuity plan is indispensable for navigating the challenges posed by hurricanes and ensuring operational resilience. This plan should encompass measures to safeguard critical assets, maintain essential functions during disruptions, and facilitate a swift recovery post-event. 

You can sign up for our Business Continuity Leadership Program to enhance your team’s skills further 

4. Securing Business Interruption Insurance 

Business interruption insurance plays a vital role in protecting businesses from financial losses resulting from operational disruptions caused by hurricanes. Investing in this coverage can provide financial support to sustain operations and facilitate a smoother recovery process.  

However, if a claim or financial recovery is required, the process can be cumbersome; having a team that can support you with claim preparation can provide extra peace of mind during a turbulent period. This is where Sigma7’s forensic accounting team can assist, and their work is almost always fully reimbursed by your insurer.     

5. Mitigating Property Risk 

Businesses can reduce their exposure to hurricane-related property damage by implementing preventive measures and fortifying their facilities. This includes securing buildings, reinforcing infrastructure, and utilizing resilient construction materials to withstand extreme weather events.  

6. Implementing Risk Mitigation Strategies 

Proactive risk mitigation is key to minimizing the impact of hurricanes on businesses. This involves measures such as diversifying supply chains, establishing emergency response protocols, and fostering partnerships with relevant stakeholders to enhance preparedness and response capabilities. 

7. Prioritizing Business Protection 

As businesses navigate the complexities of hurricane risk management, prioritizing the protection of your people, assets, and operations is paramount. This involves allocating resources towards risk mitigation initiatives. It is important to have clear emergency response processes and personnel within the organization who are trained to deal with situations such as hurricanes. These people and their roles should also be clearly communicated across the organization to remove any ambiguity and streamline safety. This helps to foster a culture of safety and resilience within the organization. 

In summary, preplanning before, during, and after a storm is critical. You can take several actions to mitigate risks and limit financial losses as much as possible.

Key takeaways: 

  • Ensure your staff are trained and know what to do before, during, and after a hurricane hits. 
  • Ensure you keep abreast of the weather forecast and take precautions, especially if a high-category storm is due to hit. 
  • Have all relevant plans in place, such as business continuity and disaster recovery, and conduct new risk assessments every year to pre-empt threats. 
  • Obtain business interruption insurance where possible.  
  • Ensure you have sufficient supplies and safety measures within your facilities in case your personnel need to stay inside until a hurricane has passed. 
  • Ensure your buildings are maintained well and prepared for the season by tying down anything that may come loose or cause additional damage – preventative and predictive maintenance can save you a lot of money in the long run.  
  • After a storm, beware of contaminated water and food, broken power lines, flooding, debris, and structural damage. 
  • Foster a culture based on safety and resilience.  

For a full guide to hurricane preparation and risk mitigation, you can download our hurricane checklist.  

At Sigma7, we offer a full end-to-end risk management solution. Whether you require support for property risk engineering and risk assessments, training for your staff claims preparation support to recover financial losses, or threat intelligence data to help you prepare for the season better; we can act as an extension of your team to reduce your risk. 

To learn more about effective preparation and recovery during hurricane season, join us on July 18 for a webinar with leading industry experts – secure your space today.

Author: Lyndsay Close

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Introducing Sigma7. We are building a new kind of risk services platform to enhance value for the world’s most prominent and complex businesses. Our mission is to help organizations create competitive advantage through actionable risk insights and business outcomes. We work globally across risk domains, apply modern technologies, and integrate the services of respected specialist brands in risk services.

We provide executive-level attention from preeminent risk experts, connecting risk profiles to the organization’s strategy and tactical operations.

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