Natural disaster losses lower, but risks remain

Natural disaster losses lower, but risks remain

Jul 30, 2014

 

The first half of 2014 has seen fewer economic losses relating to natural disasters than in recent years - but people and businesses must still be prepared.

This is the message from insurer Munich Re, which estimated the financial damage of extreme weather conditions over the last six months at approximately US$42 billion.

According to the company, this was well below the ten-year average of US$95 billion, although there were 490 'loss-relevant' natural catastrophes by the end of June.

North America experienced the heaviest economic losses, comprising 35 per cent of the total, while Europe and Asia came joint-second with 30 per cent each.

In North America, a particularly harsh winter resulted in heavy snowfalls across the USA and Canada. This had a heavy impact on businesses, with many having to stop production.

England also suffered comparatively big losses considering the country's size. A mild winter in Europe led to extreme flooding, resulting in $1.3 billion of damage.

Elsewhere, two snowstorms in Japan caused $5 billion in losses, making them the most expensive disasters in the first six months of the year.

"Loss minimization measures must remain at the forefront of our considerations," said Torsten Jeworrek, Munich Re's board member responsible for global reinsurance.

"They make absolute sense from a macroeconomic perspective, as lower subsequent losses mean that they mostly generate savings of several times the investment amount."

One way in which companies can protect themselves against revenue losses caused by extreme weather phenomenon is to consider disaster recovery software.

Natural disasters can cause IT system failures that prevent an organization from successfully operating, which can have a devastating effect on productivity, reputation and even credit ratings.

However, Oracle database users can invest in a standby database as protection against such circumstances, allowing a business to effortlessly switch from its primary database to an exact replica with minimal downtime.

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