News and analysis

Natural catastrophes cost $160 billion in 2018: companies must be ready to mitigate these risks

Hundreds of natural catastrophes killed more than 10,000 people in 2018 and caused damage and losses amounting to $160 billion, according to re-insurer Munich Re.

The number and severity of these incidents should also prompt companies to thoroughly review their own business resilience, continuity and crisis management plans relative to natural disasters.

The highest single loss of life was caused by the September earthquake and tsunami in Indonesia, where 3,100 people died, while the incident with the biggest financial impact was the ‘Camp Fire’ wildfire in California, at $16.5bn, closely followed by Hurricane Michael, again in the US, which cost $16bn.

Half of the global losses were not insured, leaving businesses, farmers, householders and governments picking up the bill.

Munich Re says there are clear indications that man-made climate change has influenced wildfires in California and the high cost of the damage is partially as a result of high-value real estate developments near forests.

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The Woolsey Fire in the Los Angeles celebrity residential area of Malibu destroyed 1,600 homes and mansions with damage amounting to $5.2bn. Fires in 2018 in California cost a total of $24bn, of which $18bn was insured.

In Europe – agriculture was hit hard with wildfires and drought, causing poor harvests, lack of animal feed for the coming winter, causing increased costs for farmers with its knock-on effect on food price trends. The overall cost was $3.2bn, with only a small proportion of the losses insured.

While Munich Re looks at increasing frequency, scale and costs of global ‘natcats’ – natural catastrophes – from an insurance and underwriting perspective, their reports and data are also very useful source material for risk management professionals in business and industry.

In addition to deciding on their level of insurance for natcats, companies must ensure natural risks feature in Enterprise Risk Management (ERM) programs and that their implications are thoroughly worked through.  A systematic review of risks should include:

  • Floods (especially operations in flood plains to or close to tidal areas, especially in places likely to suffer storm surges from hurricanes or tropical storms)
  • Wildfires
  • Hurricanes/cyclones/tropical storms
  • Drought – especially in water stressed areas where a company’s use of water as an input to production could cause trouble with community access to drinking or agricultural water
  • Other severe weather – eg snow, extreme cold

Companies should pressure-test their ability to maintain their operations in the face of any of the above that are relevant.

Employees and their families could themselves also become the company’s weakest link if their homes are damaged, cut-off or destroyed by a weather-related event.  Staff traveling are also at directly risk from natcats– as illustrated by the grounding of 110,000 flights due to the 2010 eruption of the  Eyjafjallajökull volcano. Having procedures that are well-understood by colleagues globally will contribute to both business continuity and the employer’s duty of care to staff.

A valuable method to test the company’s resilience is through scenario planning – using a natcat as the scenario for a crisis or resilience exercise on a corporate, country, business or location level.

In addition, it’s worth mapping how natcats could affect suppliers in countries and regions that are more exposed to these incidents. Suppliers can, and in many cases, must be involved in exercises. This is especially the case for those that are critical to the company’s operations and whose absence from the supply chain would seriously interrupt customer supply. Getting to know partner companies’ resilience levels and procedures will save time and contribute to a more agile, confident and effective company response.

Lines of communication should also be tested during exercises, with one or multiple methods of normal communications made inoperative in order that alternative comms channels (eg sat phones) can be established and be in place in case the company needs to respond for real.

CrisisManagement offers a world-class crisis management service to clients on resilience strategy, planning and tactics. We also undertake crisis readiness audits, as well as testing crisis plans with ‘as live’ scenarios delivered through bespoke workshops by crisis management professionals.

Our team comprises highly experienced consultants with backgrounds in corporate resilience, ERM programs, policing and the military. We have led teams that have undertaken contingency and business continuity planning, as well as crisis response to natural and man-made catastrophes, including the Japanese tsunami and nuclear disasters, floods, hurricanes, terrorist attacks and the Arab Spring movement. More information from adam.roscoe@crisismanagement.ch.

Photo credits: Heading Photo by Kevin: Mt. San Miguel. San Diego wildfire as seen looking south from Santee. Original can be viewed here

Satellite photo by Stuart Rankin: Edited Landsat 8 image of the Camp Fire on 9 November 2018, in Northern California. The city of Paradise is in the middle of the flames. Original can be viewed here

Both photos published under Creative Commons licence

 

 

Eye of the storm for Facebook

Normally companies have the chance of dealing with one or two major crises at the same time. But this wasn’t a luxury afforded to Facebook’s VP of Policy Solutions, Lord Allen, when he appeared in front of a committee of lawmakers from nine countries this morning at the UK Parliament in London.

Mark Zuckerberg was repeatedly invited, but didn’t show up. Regardless, the committee set up a spare chair and his name card (top photo, credit: Parliamentlive.tv).

Given the committee wanted to grill the organ-grinder and not the monkey, Lord Allen didn’t do a bad job. But he was fighting with one arm tied behind his back as he faced questions and accusations on Facebook’s corporate governance and corporate responsibility, and how it handles GDPR, trust, data protection, hacking, privacy, election meddling and fake news.

With a very few exceptions, the three-hour session offered very little support for Facebook, nor the type or extent of its efforts to solve the issues or mitigate the risks.

The final blow came when Charlie Angus, a Canadian MP concluded the session by saying: ‘Facebook is the problem’ and suggesting the company should face anti-trust legislation as ‘the only way to get a credible democratic response from a corporation’.

Facebook has been slow off the blocks on most, if not all of these issues.

First they denied there were problems, then insisted the problems weren’t their problem, given they’re ‘only a platform’; before being hit by the freight train that is this multi-country parliamentary committee.

A case of too little, too late by Facebook bosses, and a classic example of how ‘an issue ignored is a crisis ensured.’

At crisismanagement.ch, we often spend time with senior executives identifying scenarios, horizon-scanning and working to fix the root causes of the problem, rather than waiting for the solid matter to hit the aircon. We believe it’s time well-spent and an investment that offers a significant return for the business.

 

 

Berlin then and now

Not a classic ‘CrisisManagement’ blog, but still, a glimpse at a city that’s been ‘through the mill’ of war and division and has come out the other side as a vibrant and fascinating destination.

I made a trip to Berlin to see a former colleague who is now working in the city, and given he’s new into the job and has limited time in the day, we decided to ‘do dinner’.

As there was a national doctors’ conference in the city, the closest hotel I could find was about 18km outside the centre, in Glienicke – a leafy suburb of the former East German part of Berlin. And just to prove Berlin is stuffed with history at every turn, it’s also where the Soviets and the West used to exchange spies during the Cold War – specifically on the bridge over the river there. Gary Powers (pilot of the US U-2 spy plane) was one such exchange.

The hotel was a bit Fawlty Towers, almost empty and the staff didn’t speak German as their first language, and despite advertising Italian cuisine, I wasn’t convinced they were from Italia, either.  As I was going to be a bit late in, I asked if the key would open the door and was shown a back door where the key worked.

Off I went on the S-Bahn train to central Berlin and we had dinner in a nice place, which had been close to the Wall and opposite was a building that looked like it had some pock marks from bullet holes.  It seems the pieces of masonry with bullet marks in them were the least damaged and were re-used in the rebuilding, whereas most of the rest of the stone had been blown to bits.

The pic below (taken from one of the displays at the Soviet War Memorial (more of that later) shows how the centre of Berlin looked in about May 1945 showing (X) where the restaurant is now and an arrow pointing to the cupola of the church – with the present day view of the same church in the next pic, taken from the street. Distance from ‘X’ to church – about 50 metres.Screen Shot 2018-10-30 at 17.31.04

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Light show

We then had a walk around the city centre, which the old Berlin Wall criss-crosses.  The following shot shows part of the light show where images are projected onto buildings – this one depicting Maximilian Kolbe a Polish Catholic priest who took the place of a condemned prisoner in Auschwitz. He was made a saint for this action. More here https://en.wikipedia.org/wiki/Maximilian_Kolbe

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Berlin Cathedral

The city’s Gothic cathedral – like St Paul’s in London – seemed to have avoided the worst damage in a city centre that was almost razed to the ground. This night shot shows a projection of gaudy colours on the plain stone.

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Berlin Wall reminders

In some underground stations, there are memorials to the time of the Berlin Wall, where families were split overnight and rarely saw each other for years. These two following pics are from Nordbahnhof.

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I caught the train back from the city centre, although it turned out that ‘engineering works’ diverted the train around the station I was looking for, so I and a couple of other people had to get off in the middle of nowhere and we shared a taxi back to where we should have been.

I arrived at the hotel, which was in complete darkness (can only assume Sibyl and Basil were having an early night) and made for the gate, which was locked.  Given the spikes on the top of the gate, I decided to climb over the wall – not forgetting the irony of climbing over walls in this particular city…

Day Two

I saw one human being at breakfast and it was a women who offered me coffee or tea and then I made for the bus and S-Bahn train to the centre of the city to seek out some of the iconic sites of WW2.

I’d always seen photos of the Reichstag and the Brandenburg Gate , wrecked after the Second World War and the proportions of the structures and spaces around them seemed huge on the photos.  But it took me two minutes to walk from the Brandenburg Gate to the Rechstag and a further two minutes from there to the Soviet War Memorial.  Fighting in the Battle of Berlin resulted in the near-total destruction of the city centre.

Brandenburg Gate

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Brandenburg Gate today, with four horses and a crane.

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Above is a post war pic – probably autumn 1945 with Russian soldiers

The Reichstag

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Ruined Reichstag building, Berlin, Germany, Jul 1946 ww2dbase, Source: ww2dbaseBundesarchiv. Photo ID code: Bild 183-V00397. Licence: Creative Commons

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Reichstag June 3, 1945. Imperial War Museum. Public Domain. According to the United Kingdom Copyright, Designs and Patents Act 1988, copyright protection has expired for photographs created prior to 1 Jun 1957.

Soviet War Memorial

The Soviets built the memorial, using stone from a Prussian Palace which became the Reich Chancellery which was partially destroyed in the battle and from bombing by RAF Mosquitoes, and which they further reduced stone by stone for their memorial. They wanted rid of the palace as it posed a potential focus for renewed post-war German national pride. The Soviets lost around 80,000 troops in the two weeks of fighting and 2,000 just around the Reichstag.

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In this above photo, the Reichstag building can be seen in the top right corner in 1945.

Holocaust Memorial

Five minutes’ walk away is the Holocaust memorial (hundreds of dark grey blocks of varying heights laid out in a grid on a slightly sloping site), and a minute further is a nondescript car park with a rough aggregate, unfinished surface, under which was Hitler’s Bunker and the place he committed suicide in 1945. The German authorities were concerned that if the site was marked in any way, it could become a target for pilgrimage by neo-Nazis, so everything is very low-key – one small noticeboard only.

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Zoological Gardens and The Hollow Tooth

I then took the train to the Zoological Gardens station (abandoned ‘boots picture’ below) which used to be the main rail interchange for West Berlin, before the wall came down. It was also the right place to catch the bus to the airport.

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In the centre of the square, just up the road from the station is Kaiser Wilhelm Memorial Church, which was partially destroyed in RAF bombing on November 23, 1943 and which has been preserved in its damaged state. Locally, it’s known as the ‘Hollow Tooth’.

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Kaiser Wilhelm Memorial Church, partially destroyed November 1943

And finally to Tegel Airport for the trip home. The airport was used as one of the air bases to receive supplies during the Berlin Airlift and more recently, apparently they had to do a survey of unexploded WW2 bombs, prior to widening the runway to take the A330 and Boeing 777.

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All colour pics my own 😉


 

A 101 for press conferences

I have no idea why, but today, I’m prompted to share some hints a tips on press conferences.

Some key principles:

  1. Unless you have something earth-shattering to communicate to all of the media, at the same time – don’t do a press conference; for businesses a conference call is often more effective
  2. Use the first couple of minutes for an opening statement, covering the two or three key messages you want to get out during the session
  3. Answer the question, then shut up; if in doubt, leave it out
  4. Use answers to communicate your two, or maximum three key messages
  5. Don’t talk about yourself, or how good you are, the size of your brain, or how unfairly treated you feel
  6. Don’t insult the journalists and don’t belittle them, their questions or their news organisations
  7. If you have answered the question previously, you don’t have to include that answer to other questions
  8. Use simple language, especially if the topic is complex or technical, but don’t use slang and don’t swear. If you have to explain a phrase, like ‘con-job’, you shouldn’t use it
  9. Don’t call people who are not in the room ‘dishonest’, ‘low-life’ or ‘bad people’ – they can’t defend themselves at the event, but will definitely get even later
  10. Press conferences are streamed, so both friends and opponents can selectively cut your comments and post them on social media to support or harm you. So keep the messages as simple as possible

Anything I missed?

With thanks to my mate and all-round comms expert, @liamherbert, who sometimes sanity-tests my drafts.

Photo: Richard Nixon Presidential Library and Museum [Public domain], via Wikimedia Commons, October 26, 1973.