Businesses must prepare for natural disasters in Q3

Businesses must prepare for natural disasters in Q3

Aug 2, 2014

 

The first half of 2014 has been relatively calm when examining natural disaster data, but the third quarter is typically the most dangerous for extreme weather phenomenon.

This is according to new analysis by Aon Benfield, with the company releasing its latest Global Catastrophe Recap report for the first six months of the year.

Statistics showed economic losses from natural disasters around the world have totaled US$54 billion so far in 2014, which was 49 per cent lower than the US$106 billion 10-year average.

The figure was also below the US$95 billion lost in 2013, and supported similar research conducted by German insurer Munich Re earlier this month.

Steve Bowen, associate director and meteorologist with Aon Benfield's impact forecasting team, said this may be good news for many people, but there could be trouble on the horizon.

"Despite some well-documented natural disaster events during the first half of 2014, our data show that losses from both an economic and insured perspective were each below their recent averages," he explained.

"However, a relatively quiet first six months does not mean a similar trend will continue throughout the rest of the year."

His comments may encourage businesses to consider re-examining their existing disaster recovery (DR) capabilities, including updating DR plans or investing in new technologies such as innovative standby databases.

Mr Bowen claimed the third quarter of the year is typically the costliest in terms of extreme weather, largely due to Atlantic hurricane season hitting it peak.

"While the pending El Nino is likely to limit the overall number of storms in the basin, it would only take one major landfalling event to quickly make 2014 an above-average year for losses - and history suggests that it is just a matter of time before the US endures another major hurricane," he said.

So far this year, 55 per cent of insured losses have occurred in the US, while 23 per cent were in Europe and 19 per cent in Asia.

Severe thunderstorms were the most expensive natural disaster type in the first half of 2014, leading to 32 per cent of all economic losses and 46 per cent of insured costs.

These catastrophes mainly consisted of heavy hail and wind in the US and Europe. However, the costliest single event over the six months was winter weather in Japan during February, where US$6.2 billion was lost.

Overall, H1 saw seven natural disasters that resulted in losses of at least US$1 billion, including flooding in southern and eastern Europe in May, Brazilian droughts from January to June and a lack of rainfall in the US over the same period.

Europe also experienced severe weather conditions in June that caused US$3.5 billion worth of damage.

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