Much will be publicized this week as the nation looks back at Hurricane Katrina, the costliest hurricane in history, which struck on Aug. 29, 2005, and caused billions of U.S. dollars in damage,
Yet much of the damage could have been prevented, notes business property insurer FM Global. To help business leaders better understand the psychological barriers that can affect their business decisions when addressing vulnerabilities to natural disasters, FM Global commissioned a new research report, “Flirting with Natural Disasters: Why Companies Risk It All,” which examines why some companies prepare for the risk of natural disasters while others seemingly gamble with their future.
In its executive summary, the report maintains that key behaviors, such as denial (the process by which individuals pretend that they or their businesses will be undisturbed by a disaster or otherwise protected from its effect, affect organizational decision-making
“Even with scientific data arguing a significant risk or threat, certain people and organizations shrug off the possibility,” notes the report. “When a natural or man-made disaster strikes and leaves a company unharmed, the thinking is ‘the worst has passed,’ although the risk of a more sever event has not changed.”
The report also provides solutions that can guide change in organizational decision-making behavior with regard to natural disaster risks.
The report focuses on:
• Reasons why business leaders fail to plan for catastrophes, ranging from denial to short-range vision to the mistaken belief that insurance alone will enable a return to "business as usual" after a disaster
• Consequences of inaction, especially in the face of evidence that proves most property damage from hurricanes, earthquakes, fires, floods or man-made hazards can be minimized or eliminated
• Ways leaders can break through the barriers of human nature to better protect their businesses and communities
"Natural disaster risks are real," said Ruud Bosman, vice chairman at FM Global. "They are not probabilities, thresholds, models or likelihoods. The wrong discussion for business leaders is one around whether it will ever happen, because it will. If more organizations considered the impact of psychological behaviors on their disaster risk preparedness, as outlined in this report, the world would be a much safer place."
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