Hurricanes Helene and Milton left a path of death and destruction. We can debate the cause of global warming but one thing is sure, we now have more people and buildings in the paths of hurricanes. Here are some risk management steps commercial property owners can take to help mitigate the cost of these hurricanes:
1. Comprehensive Insurance: Ensure that properties are covered by comprehensive insurance policies that include windstorm and flood coverage. Given the high risk in Florida, it's crucial to review and update policies regularly to ensure adequate coverage.
2.Parametric Insurance: This type of insurance pays out based on the occurrence of a specific event, such as a hurricane reaching a certain wind speed, rather than the actual damage incurred. It can provide quicker payouts and help cover immediate expenses.
3. Physical Mitigation Measures
- Building Reinforcements: Invest in hurricane-proofing measures such as storm shutters, reinforced roofing, and impact-resistant windows. These can significantly reduce damage during a hurricane².
-Flood Barriers: For properties in flood-prone areas, installing flood barriers or elevating buildings can help mitigate flood damage.
4. Financial Instruments
- Catastrophe Bonds: These are high-yield debt instruments designed to raise money for companies in the insurance industry in the event of a catastrophe. They can provide a financial buffer against large-scale hurricane damage.
- Hurricane Futures and Options: These financial instruments allow property owners to hedge against the financial impact of hurricanes by locking in prices for future contracts based on hurricane activity⁴.
5. Diversification
- Geographic Diversification: Spread investments across different geographic locations to reduce the impact of a hurricane hitting a specific area. This can help balance the risk and protect overall portfolio value.
6. Emergency Preparedness and Response Plans
-Business Continuity Planning: Develop and regularly update a business continuity plan that includes detailed procedures for before, during, and after a hurricane. This ensures that operations can resume quickly and efficiently².
- Emergency Kits and Supplies: Maintain emergency kits and supplies on-site to support immediate needs during and after a hurricane.
7. Government and Community Programs
- FEMA and SBA Loans: Utilize loans and grants from the Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA) for disaster recovery and rebuilding.
- Community Resilience Programs: Participate in local and state resilience programs that offer resources and support for hurricane preparedness and recovery.
Comments