Paying it Forward: Industry Leaders Celebrate at Spencer Gala

Every year in September, leaders in the insurance world celebrate the profession and show their support for the next generation of risk management and insurance professionals. This year, close to 700 executives made their way to the Spencer Educational Foundation’s 9th Annual Gala on Thursday night at the New York Hilton Midtown. Nearly $1 million in donations were accepted at the event, a critical fundraising initiative for the Foundation. Proceeds will directly fund grant, scholarship and internship programs for undergraduate and graduate students who are pursuing careers in the field.

“The Gala is a wonderful reminder of just how generous and passionate professionals in this industry are,” said Ron Davis, executive vice president at Zurich and Spencer Educational Foundation chairman. “Tonight we’re celebrating the profession that has afforded us so much by giving back and creating meaningful opportunities for future risk professionals.”

The Gala honored 2017 Spencer Scholars Jayde Lim Ah Tock, a junior from Temple University, and James Pappas, a senior at St. John’s University. “Being a Spencer Scholar has allowed me to focus on my university’s program,” Tock said. “I want to thank the donors for allowing me to pursue something that is so important to me.”

When speaking about the support Spencer provided, Pappas said he is now “confident, optimistic and energized” about his future and knows he is “joining an amazing industry that truly makes a difference.”

Among the industry leaders in attendance were honorees Joseph Tocco, chief executive, north America insurance at XL Catlin, and Michael Rice, chief executive officer at JLT Specialty USA. Both are longtime Spencer supporters and were recognized for their efforts to move the Foundation’s mission forward.

The night’s festivities concluded with remarks from the honorees whose comments focused on the industry’s talent gap and the aging risk management workforce.

“The world needs our industry and our industry needs to attract and develop new talent,” Rice said. “Spencer is a wonderful conduit that allows us to celebrate this talent and the future of the profession.”

Tocco added, “I’m proud to be in an industry that places so much energy on education. Enlisting the next generation of risk professionals is more imperative now than ever before. We need to make “risk management” students’ first choice and not a profession by accident.”

Students around the world have benefited from Spencer funding. Since its inception, the charitable nonprofit has awarded 970 scholarships totaling about $6.4 million, and $3.25 million in grants to universities and professional institutions for educational programs and conferences.

Post-Harvey Lessons For Chemical Plant Managers

One of the many hazards exposed by Hurricane Harvey occurred in Crosby, Texas, when the Arkema chemical plant suffered fires and small explosions on Aug. 31 and Sept. 1. Floodwaters caused the fires by penetrating the facility and shutting down the cooling systems designed to stabilize 500,000 pounds of highly flammable materials inside. This ultimately caused a mandatory evacuation for all residents within a 1.5-mile radius of the plant. Local news outlets reported that Arkema had no plan in place for six feet of flooding and its last risk assessment was submitted in 2013.

With Hurricane Irma being tracked at 175 miles per hour in the Caribbean, it is possible that chemical plants in the path of destruction—including Florida and the southeastern United States—may face a similar scenario. Regardless of the location of your plant, here are some tips that can help reduce potential business interruption and physical injury during a major natural disaster:
Update your risk assessment. Use Harvey as a catalyst to revisit your risk assessment, especially since new information has emerged about the potential for natural hazards or disasters that can trigger a chemical accident. As recently discussed, the best assessments do more than just feature a column of checked boxes to achieve an organization’s objectives and mitigate business interruption. “They prioritize top risks, assign risk ownership, and most critically, integrate risk management and accountability into front line business decision-making,” says Dean Simone, PWC’s U.S., Asia-Pacific, and Americas Cluster Risk Assurance Leader.

Submit the assessment to the EPA or other government-appointed body, like your state’s Commission on Environmental Quality. Your facility needs to be able to withstand significant damage to prevent further incidents and public harm. The feedback will hopefully provide some useful criticism to ensure public safety and business continuity.

According to ABC’s Houston affiliate:

In at least one of Arkema’s hazard mitigation plans filed with the federal government, plant officials acknowledged that flooding is a risk. The site sits in a FEMA “high-risk” floodplain that has flooded in the past, leading to a power failure. That time, the site only had six inches of water, a former plant worker said.

It was later revealed in an internal company timeline of events that Arkema did not move temperature-sensitive chemicals via refrigerated trucks and instead banked on its two backup systems, which failed. It seems certain that Arkema will have to consider at least six feet of floodwater when it revises its plan.

Institute an emergency plant management system. This may be included in your company’s risk assessment, and it is important that your employees also know the protocol when it comes to disaster prevention. This includes establishing the lines of authority and communication while on-site and during a catastrophe. OSHA provides guidance for chemical plant management in the event of a mass disaster.

Develop public-facing communications plans. Your communications team, led by an executive officer, should have advisory plans in place in anticipation of, during and following an emergency. The good news is that you don’t have to draft them from scratch. The Centers for Disease Control and Prevention (CDC) offers communications worksheets, templates and guides dedicated to water, sanitation and hygiene-related emergencies and outbreaks. You can customize these documents to reflect your organization’s capabilities and to alert nearby residents and businesses.

Be sure to issue advisories through all possible outlets, including social media. One thing Arkema did correctly was send press releases, incident statements and alerts via Twitter in addition to traditional outlets in order to keep as many people informed as possible.

Communicate with local authorities and emergency workers. All energy plants impact their local communities, surrounding areas and ecosystems. Your company’s hazard plans should be communicated to local fire and police departments and hospitals. This ensures that emergency workers know the potential dangers your plant faces in the event of a disaster and the steps you plan to take to mitigate them.

Ensuring Your Company’s Disaster Relief Donations Are Well Received

With Hurricane Harvey’s effects being felt in Texas and Louisiana for some time to come, businesses may want to help victims by making corporate donations. Corporate decision-makers should carefully consider ways to contribute, since some recent post-disaster efforts have not helped as intended.

Depending on your industry and your company’s size, you may have access to supplies or a service that will be useful to victims and aid workers. The New York Times recently listed the local organizations that will accept certain donations. Your efforts can be coordinated with an accredited organization or the local government to determine whether your donations qualify.

Risk management and insurance professionals who would like to help Harvey victims directly can visit the Insurance Industry Charitable Foundation’s (IICF) IICF Hurricane Harvey Disaster Relief Fund. The fund was established in response to a surge of inquiries from its community as to how it can help. The fund has already received $80,000 in commitments, and the IICF will forward all contributions to local nonprofits assisting victims in the area, including the American Red Cross and specifically its Hurricane Harvey disaster fund.

During catastrophes, experts generally encourage these sorts of finance-based efforts in lieu of sending tangible items without a partnership with a local non-profit. Many organizations suggest that it is best to let the aid workers on the ground use their allocated funds to get necessity items like water, toiletries and food. In its Tips For Giving In Times Of Crisis page, CharityNavigator.org dissuades companies from sending supplies ad hoc:

“[This] type of philanthropy is simply not practical or efficient. Even if mail could get to an impacted region, no one is set up to receive these goods, much less organize and distribute them to the victims.”

It has been well documented that donations of tangible items – especially used ones – can cause unintended problems. Some never reach those in need and eventually wind up in landfills; and certain used clothes, like old shoes and Halloween costumes, might insult survivors.

According to Kansas disaster response coordinator Hollie Tapley, about 75% of donated goods will go to waste despite the donors’ good intentions. “Money is the best way because we know culturally what people need,” Tapley told Kansas State Network before Harvey hit Texas. “One group needs something totally different than another group.”

Blood donations are always in high demand following a disaster and national blood banks sometimes hold emergency drives to allocate blood to the affected areas, which might not have the resources to hold their own. If you are determined to reach the affected area, confirm those details with the donation center’s organizer. Bloodsource’s donation locations can be found on the group’s website. The Red Cross also provides information for potential donors online.

Harvey Losses Could Reach $90 Billion

With weeks to go before floodwaters recede in some parts of Texas, Hurricane Harvey—which delivered more than three feet of rain in areas of Houston—has so far caused at least 38 deaths and numerous injuries. Harvey was downgraded to a storm Wednesday night, but tens of thousands of people are still in shelters, some of which are also flooded, fearful of what they will find when they return to their homes.

“Hurricane Harvey has already broken all U.S. records for tropical cyclone-driven extreme rainfall, with observed cumulative amounts of 51 inches,” Michael Young, RMS head of Americas climate risk modeling said in a statement.

Joel N. Myers, founder, president and chairman of AccuWeather declared Hurricane Harvey to be, “The costliest and worst natural disaster in American history. AccuWeather has raised its estimate of the impact to the nation’s gross national product to $190 billion or a full one percent, which exceeds totals of economic impact of Katrina and Sandy combined.”

Damage assessments are climbing, with modeling and analytics firm RMS now estimating that losses incurred by wind, storm surge and inland flooding could be as high as $70 billion-$90 billion. The majority of losses are coming from inland flooding in the Houston metropolitan area, where more than seven million properties top $1.5 trillion in value. RMS said the estimate includes damage to all residential, commercial, industrial and automotive risks in the area, as well as possible inflation from an area-wide demand surge.

According to RMS:

Most losses will be uninsured, given that private flood insurance is limited. However, although the insured losses will remain uncertain for some time they will be significant, as private coverage is not consistent: there are significant variations in how coverage is provided by individual insurers.

Coverage for some of the residential losses has been provided by the National Flood Insurance Program (NFIP). There are approximately 500,000 NFIP policies that will be affected by Harvey, and the losses to the program will be very significant – potentially the largest event to date. However, NFIP penetration rates are as low as 20% in the Houston area, and thus most of the losses will be uninsured. This will rekindle the public policy debate around this issue.

Texas Gov. Greg Abbott estimated that more than $125 billion in federal funding will be required to help the state recover from Hurricane Harvey, the Wall Street Journal reported.

Adding to the area’s woes were two explosions at the Arkema Inc. chemical plant in Crosby, Texas, 20 miles northeast of Houston early on Thursday.

The plant, which produces organic peroxides used in products like kitchen counter tops, polystyrene cups and plates, industrial paints and PVC pipes., was without electric service since Sunday and lost refrigeration when backup generators were flooded. Because the products need to be kept cold to prevent a chemical reaction, workers had moved them from warehouses into diesel-powered refrigerated containers, but those were also flooded.

A sheriff’s deputy was taken to a hospital after inhaling fumes, according to Reuters.

Residents in a 1.5-mile radius of the Arkema plant were evacuated on Tuesday, and water levels there make it too dangerous for workers to assess the situation from the ground, officials added.

Arkema urged people to stay away as the fire burns out. Black smoke was billowing from the site, Harris County Sheriff Ed Gonzalez said at a televised news briefing.

The Federal Aviation Administration said Wednesday it had temporarily barred flights from the area because of the risk of fire or explosion.