Report: Many Companies Not Prepared for Disasters

A new survey of financial executives representing the largest corporations in North America reveals almost all companies are exposed to natural disasters, yet many of those firms are not well-prepared for such catastrophes and are not overly concerned about the potential business impact.

The findings of the 2008 Natural Disaster Business Risk Study, commissioned by FM Global, are based on the responses of 100 financial executives from U.S.- and Canada-based corporations with at least US$1 billion in annual revenue.

While 96 percent of financial executives said their companies have operations exposed to natural catastrophes, such as hurricanes, floods and earthquakes, less than 20 percent indicated that their firms were “very concerned” about such natural disasters negatively affecting their bottom line.

Preparation Gap Spans Multiple Natural Catastrophes

The study findings indicate a consistent disconnect across three of the most common and costly types of natural disasters: hurricanes, floods and earthquakes.

• Hurricanes:
  • While 80 percent of companies have North America operations located in regions exposed to hurricanes, nearly 50 percent reported they are not well-prepared for a hurricane.
  • Nearly 80 percent of financial executives from those companies are not overly concerned that a hurricane/typhoon or tropical cyclone could negatively impact their company’s bottom line.
• Floods:
  • While 90 percent of companies have North America operations located in regions exposed to floods, more than 60 percent indicated they are not well-prepared for a flood.
  • Almost 90 percent of financial executives from those companies are not overly concerned that a flood could negatively impact their company’s bottom line.
• Earthquakes:
  • While more than 80 percent of companies have North America operations located in regions exposed to earthquakes, more than 70 percent revealed they are not well-prepared for an earthquake.
  • Eighty-five percent of financial executives from those companies are not overly concerned that an earthquake could negatively impact their company’s bottom line.

The 2008 Natural Disaster Business Risk Study was commissioned by FM Global (www.fmglobal.com) and administered from May 2008 to June 2008 by Opinion Research Corporation (www.opinionresearch.com).