Disaster risks: What’s creating exposures for businesses?

“Employees are going to work from home for the foreseeable future,” said Dale Buckner (pictured), CEO of Global Guardian. “So, when it comes to planning for natural disasters and disruptive events such as earthquakes, hurricanes, tornadoes, tsunamis, and wildfires, I think the number one difference is that you now must account for people that you think are in North Carolina, but could be in Australia, the Caribbean, basically thousands of miles away.”

Buckner also strongly advocates for business leaders to put disaster risk at the top of their criteria when planning to expand their physical footprint. As executives consider their expansion plans for office locations, plants, and warehouses, they need to be aware of the natural disaster risks of chosen locations and potentially reassess plans to avoid those risks altogether.

How does remote work influence businesses’ disaster risk planning?

Around 5.1 million Canadians were working from home as of May 2021, according to data by Statista. Remote working has quickly become the new norm, thanks to the COVID-19 pandemic, and it looks like it’s here to stay for now.

Organizations should therefore consider how their duty of care policy covers their remote workforce and what aid they will provide should one of their remote workers be involved in a natural disaster event.

Buckner, who led rescue and response teams in the US after Hurricane Ian struck in late September last year, said that hybrid and remote working arrangements have made situational awareness more complicated for companies during catastrophes.

“Normally, when there’s a hurricane forecast four days out, you have meetings in person and give instructions, then send people home with medical kits and satellite phones. You perform ‘call tree’ [exercises]. Could you replicate that with a video conferencing app? Sure, but the issue is accounting for your work-from-home employees,” he explained to Insurance Business.

Global Guardian is a duty of care provider for organizations during disasters, providing rescue and response, emergency aviation, medical support and more worldwide. Buckner himself had firsthand experience of trying to track down clients’ employees in the aftermath of a horrific storm.

“During Ian, we were tasked to go find people that literally had not been in Florida for almost a year and the employer simply had no idea,” he said. After emails and frantic phone calls failed to reach the missing employees, rescue teams stormed into flooded houses only to find them empty.

“It turns out, [the employees] hadn’t been there for a while. So, this is something that businesses need to be considering when they’re preparing their workforce for these storms, floods, or other catastrophic events,” Buckner concluded.

Business leaders should account for remote workers in their emergency response plans, especially when it comes to performing health and welfare checks. Organizations could also consider placing their remote workforce under business travel insurance policies.

“You would arm an employee that was a high-volume traveller, for example, a sales director, project manager, or a C-Suite member, with business travel insurance. Kidnap and ransom, medical evacuation, and other benefits would be wrapped around the policy,” he said.

“What we’ve told clients is that they can take that model and pivot it to people working from home, and simply treat them as if they’re a traveller.”

How do physical expansions impact businesses’ disaster risk?

No organization, large or small, can escape the perils of a changing climate. But when it comes to planning physical expansions, the risk of natural disasters carries more weight than ever.

“As leaders think about [where to build] their next headquarters, administrative office, or manufacturing site, the threat of natural catastrophes needs to be part of their calculus,” Buckner said.

“Is this location in a flood or fire zone? Will there be enough water supply in the future? If you invest in a headquarters in Las Vegas, when the future of the Colorado River as that city’s main water source is horrific, it could pose a real problem. There’s going to have to be kinds of investment to pipe water in, which makes it more expensive. So, I would simple say ‘add that as part of your criteria’.”

How can brokers help clients prepare for natural disaster risks in 2023?

2022 was a year marked by climate catastrophes, and Buckner expects 2023 will be no different. Brokers can help their clients prepare by reviewing their insurance policies and assessing coverage needs to accommodate physical expansion plans or remote working arrangements.

Buckner stressed that creating a robust disaster response plan is critical, especially when it comes to ensuring the welfare and safety of employees.

“What we find is that most firms just go, ‘We have insurance; we’ll figure it out. Don’t worry, we’ll get hold of everybody.’ I just think that’s failed so much. There simply must be more rigor, more communication, and more planning,” the CEO said.