Winter Storm Harper took its toll on large parts of the Midwest and Northeast, causing several deaths, hundreds of car accidents, and power outages that affected tens of thousands, according to the Weather Channel.
Extreme weather—from blizzards to hurricanes to wildfires—wreaks havoc on businesses in every region of the country, with damage having a lasting effect. In fact, according to the Insurance Institute for Business & Home Security, 40% of small businesses do not reopen after a severe weather event. This is in part due to a failure to have an actionable plan in place. As we discussed in Step up your disaster preparedness, don’t wait for the news report, organizations can get tripped up when there’s confusion over who should act and what those actions should be during a weather crisis. Without clear plans, practice, and timely alerts, critical resources may fail to execute.
Origami’s cloud-based RMIS continues to make weather preparedness a priority. With our new proximity search feature, audit functionality, and flexible data integration, you’ll be able to quickly identify major weather risks and effectively communicate how key parties can take action.
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The risk management industry certainly had an eventful 2018. As the calendar closes out another year, we’ve picked five prominent trends that may impact your organization in the upcoming year.
1. Increasing Damage from Natural Disasters and Extreme Weather
The 2018 list of major natural disasters is notable for its scope and intensity. From Japan’s flooding and mudslides to California’s wildfires to an unprecedented global heatwave, records for severity and damage were shattered throughout the year. One article noted that, “Nationwide, 8.5 million acres, an area larger than Maryland, have burned this year to date.” Unfortunately, extreme weather and increased natural disasters are becoming more commonplace.
In the article Step up your disaster preparedness, don’t wait for the news report, we discussed how to combine audit technology with weather alerts to develop a preparedness solution that works in real-time and ensures your organization is tested and ready when the next emergency hits.
2. Telematics Emerging in Fleet Management
Consumer adoption of telematics continued at a strong pace, particularly with drivers in the youngest age range, where some studies estimate four in five drivers have telematic-based policies. While the use of telematics to enhance fleet management programs has been underway for some time, the value of this data is becoming more clear.
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Whether it’s boxes of paper forms that must be keyed into a system, pouring over spreadsheets to verify that critical requirements are met and up to date, or sending yet another email to request missing information, there’s almost always room for improvement when it comes to the management of vendor-related data and workflows.
From the submission of application forms through to the evaluation of vendor performance, businesses can add to the value of their risk management information system (RMIS) by using the system to transform their approach to vendor management. In this post, we look at four examples of how a cloud-based RMIS like Origami Risk can contribute to cost control, service excellence, and risk mitigation.
1. Streamline the vendor intake process
Simplifying the vendor application process reduces the amount of time staff spend engaged in time-consuming, repetitive activities like keying data and sending multiple emails to chase down missing details. This process can also be the first step in defining expectations and building a relationship with potential vendors. After all, as 6 essential steps for managing vendors makes clear, “A good vendor relationship starts well before you ever sign a contract with a vendor.”
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The devastating impact of Hurricane Florence has led many to examine their organization’s disaster preparedness efforts. Aside from the sheer size and scope of this storm, additional factors further complicated preparations.
First, a rapid change in conditions over the past two weeks led to a rapid increase in storm activity—as many as six tropical cyclones were active in the northern hemisphere simultaneously (three of which were in the North Atlantic). Second, as Florence neared landfall, a dramatic shift in the forecasted impact areas prompted a last minute update of contingency plans. These challenges, combined with the trend of slower, more damaging storms, raises the bar for how sophisticated systems need to be in order to manage these risks.
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The enormous Mendocino Complex fire has burned more than 450,000 acres and still isn’t fully contained. Hurricane Lane unleashed historic levels of damage in Hawaii. Both of these natural disasters earned significant media coverage and mark the type of events typically considered when trying to manage the risk from natural disasters.
Assessing the most common threats
The largest disasters dominate media coverage. Yet when it comes to insurable losses, the factors most likely to cause damage to an organization may not always be the ones making headlines. To effectively manage these risks, risk managers must first focus on these events through the lens of preventing losses and preserving business continuity.
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Munich Re reports that 2017 was the second most expensive year for natural disasters ever recorded, with overall global losses estimated at over $360B. For the U.S., last year’s severe storms resulted in a share of losses that was significantly higher (50%), than the long-term average (32%). A recently published Business Insurance special report cites estimates of insured losses of $15.4B–with $12B caused by inland flooding–stemming from Hurricane Harvey, alone.
Ernst Rauch, head of Munich Re’s Corporate Climate Center, holds that these patterns are likely to continue. “We have a new normal. 2017 was not an outlier.”
A quick look at the weather on the first day of Spring seems to underscore that point.
- Businesses in the mid-Atlantic and Northeast expect to be digging out from the fourth winter storm in 3 weeks.
- High winds and hail are causing damage across the Southeast.
- Flash flood watches have been issued by the NWS in parts of Southern California.
Is your business prepared for the “new normal”?
With large-scale natural disasters becoming increasingly common and more costly, a renewed focus on business continuity and disaster recovery is essential. Preparing for these events, along with the ability to rebound from them, are a factor on which businesses must now be able to compete. … read more
2017 was an eventful year in business. From record-setting natural disasters, to high profile announcements on technology choices, to the expansion of self-service technology further into all sectors of business, businesses faced several key challenges this year. We’ve put together a list of trends in 2018 that may emerge from these issues.
Renewed Focus on Disaster Recovery/Continuity
With a record-setting hurricane season and overall losses estimated at over $360B, Munich Re reports that 2017 was the second most expensive year for natural disasters ever recorded. In the US alone, fires ravaged California and the pacific northwest, floods and hurricanes struck the southeast, and no fewer than five major tornado/hail outbreaks occurred, each causing more than $1B in losses. Globally, the past year’s other disasters included typhoons, severe flooding, earthquakes and volcano eruptions. Ernst Rauch, head of Munich Re’s Corporate Climate Center, stated that these patterns were likely to continue. “We have a new normal. 2017 was not an outlier.”
As businesses are faced with operating in environments where large scale natural disasters are increasingly common, expect to see a renewed focus on disaster recovery and business continuity. Rebounding from these events and returning to normal operations will become another factor on which businesses need to compete. One of our clients used Origami Risk to monitor and track the progress of relocations and reopenings after the floodings in Houston, demonstrating an innovative way to utilize RMIS technology to overcome these challenges.
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The impact of Flood risk has typically been managed by government controls (building flood barriers, managing release of water via dams, and determining the locations and types of structures that can be built). Owners of properties are then responsible for the financial impact of any remaining risk related to flooding. This is often handled through the purchase of insurance and, sometimes, through reliance on a government disaster payments.
This approach has not been perfect. The National Flood Insurance Program has been around since 1958 and has so far managed to incur a debt well in excess of $24 billion. And 2017 was certainly a bad year for flood victims and insurers. Premium increases can be expected and may not be available for locations where there have been multiple claims over the years. (One location, for example, is said to have been flooded more than 30 times in 50 years).
There are new options for some flood damage control, such as replacing sandbags with chemical filling such as silica, which is relatively light, doesn’t require the labor associated with filling bags, and may be reused if floodwaters contain no significant pollution. Additionally, new technologies are being deployed to prevent flooding. These include hydraulic powered water gates in Tokyo, surge barriers in the Netherlands, and the Fox Point Hurricane barrier, which protected Providence Rhode Island against the surge of Hurricane Sandy.
Insurance of own property and other various controls are, typically, the primary methods to reduce the impact on organizations. So, how is this related to Enterprise Risk Management? … read more