Last year was the most expensive ever for natural disasters in the US, with total damages from Hurricanes Harvey and Irma and other events exceeding $300 billion. Marked by an especially active hurricane season and the recurrence of devastating wildfires in California, 2017 was a challenging year—and 2018 is shaping up to have its own share of challenges from natural disasters.
From an economic perspective, there’s typically a regional spike in business activity in the days leading up to a hurricane—but the loss of personal and property value always outweighs any temporary gains. In the goods sector, the impact is less pronounced—unless a business sustains property damage or loss of inventory, it can usually recoup lost time. But in the services sector, lost productivity during and after storms can never be regained.
Businesses can recover from natural disasters more quickly if they have a contingency plan in place before the storm strikes. This includes asking questions like “Have we formed an emergency management team?” and “Do we have a thorough understanding of our insurance coverage for disaster recovery?” Having a backup office location is key, but only if it’s fully operational and tested.
While hurricanes may have a highly visible impact on businesses, there are myriad ways operations can be interrupted—from employee illness to cyberattacks to physical events like protests at office locations. It’s important for businesses to examine their contingency plans regularly throughout the year—not just at the height of hurricane season.
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