How Small Businesses Can Prepare for the Next Natural Disaster

As we have witnessed these past two months, Hurricanes Harvey, Irma and Maria devastated many parts of the south coast and the economies of Texas, Florida and Puerto Rico. The damage from the storms is expected to halt U.S. GDP by an entire percent. Recent estimates put the costs of recovery at around $85 billion and $59 billion for Harvey and Irma respectively.

While larger businesses have the resources to rebuild and recover, many smaller businesses do not. They will likely struggle to account for the cost of repairs, and even lose their companies in the process. According to FEMA, nearly four in 10 small businesses struck by a natural disaster are forced to permanently shut down. With more storms expected in the coming weeks as hurricane season persists through November, it is vital that small business owners prepare in the meantime.

The first step for any small business is to prepare internally. Here are three best practices that small-business owners can adopt to prepare for a future hurricane or any other natural disaster.

  1. Establish a recovery plan: Often, disaster recovery plans fall to the bottom of small-business owners’ to-do lists, especially if their business is located in an area that doesn’t typically experience high-risk weather. However, no business is immune from a harmful storm’s impact. So disaster preparedness starts with a formal plan that’s comprehensive and allows the company to quickly restore its normal operations following an emergency.
  2. Discuss your plan with all employees: It is crucial for your entire staff to be on the same page when it comes to what your disaster plan involves in order for it to be effective. So once small-business owners have a plan in place, they need to ensure that their employees know what’s included and what their responsibilities are should a natural disaster strike. Owners can share this information by emailing a copy to all employees and discussing the plan in detail at the next all-hands meeting.
  3. Back up your business’s data: Small-business owners should ensure their data is backed up both virtually and physically in a secure location. Doing so can prevent a natural disaster from turning into an even worse data loss debacle.

While following these steps can get small businesses on the right track toward hurricane preparedness, no company can be fully protected without insurance. With a plan in place, the next step is finding the right hurricane insurance plan. But there is often confusion over what proper hurricane coverage looks like.

Small businesses should take into account the specific rules and regulations of their industry when choosing an insurance plan to protect against hurricanes and other natural disasters. That said, there are two policies that are essential to businesses that need a defense against hurricanes.

Commercial Property Insurance is a policy that helps cover some of the cost to repair damages or restore your business property should a natural disaster cause harm. It is important to note, however, that many commercial property insurance policies only protect damages caused by hurricane winds, not flood damage resulting from rising water. If your business is located in an area prone to hurricanes, ask your insurance provider about “riders” (also known as endorsements), which can be added to your policy for more complete coverage.

Business Interruption Insurance is a policy that helps companies deal with the extended time (and business) they may lose as a result of hurricane damage. Often, this forced, lengthy pause in operations is what causes small businesses to permanently close, due to the high costs they incur and their inability to generate the revenue required to cover those costs. Business interruption insurance helps small businesses through by providing the funds for necessities such as taxes, loan payments, rent and salaries. Again, it is key to ask your provider exactly what a policy covers before purchasing it. Typically, business interruption insurance only protects your business if the circumstance that forced you to shut down is already covered by your commercial property policy.

This year’s Atlantic hurricane season has already been deemed the third worst on record. With more than a month to go, small businesses can ensure that they’re protected from damages through internal company policies and a thorough insurance plan. As far as hurricane insurance coverage goes, it’s crucial for businesses to do their research and find the policies that will provide the best protection. Although developing these plans will take time and effort, the risks mitigated and money saved as a result will be well worth it in the long run.

Hurricane Debris Removal Costs Climbing

It’s difficult to find a photo of Houston, Miami, or any city hit by Hurricanes Harvey and Irma that doesn’t contain mountains of debris. As cleanup continues, more trash is piling up everywhere. Cities and towns are faced with a number of issues including costs, expediency, manpower and just what to do with all that trash.

Reuters reported that cleanup after Hurricane Katrina in 2005 took about a year. Hugh Kaufman, a retired EPA solid waste and emergency response analyst said the overall bill for Katrina was $2 billion, the largest to date. That cleanup spanned several states and the demolition of the more than 23,000 homes in the New Orleans area alone. He believes the combined cleanup tab for Harvey and Irma will top Katrina‘s.

In Houston, city officials estimate that about 8 million cubic yards of debris will need to be hauled away, enough to fill up the Texans’ NRG Stadium twice. There are about 100,000 piles of trash in the city, with collection farther along in some neighborhoods than in others, according to the New York Times. Moving these mountains of garbage has been left to county and local officials, who hire debris removal companies to help. FEMA reimburses local governments for 90% of their cost. About $136 million in federal funds were released to pay for initial cleanup around Houston, Reuters said.

In Brevard County, Florida, it is estimated there will be 600,000 cubic yards of trash hauled away—compared to 800,000 cubic yards after Hurricane Matthew—which they anticipate will take about a month, Florida Today reported. Because there is no set schedule for pickup, a number of residents decided not to wait, instead hauling their debris to landfills, causing traffic tie-ups.

Where will all this trash go? In Texas, contracted waste haulers and municipal crews are moving trash to dozens of landfills.

Judith Enck, a former regional administrator for the Environmental Protection Agency who dealt with the aftermath of Hurricane Sandy told the New York Times that figuring out what to do with debris is one of the most challenging aspects of any storm. Because decisions are generally made at the local level, she said, “every community has to kind of reinvent the wheel.”

Setting aside appliances like refrigerators for recycling, chipping downed trees for mulch instead of burning them, prevents pollution and extends the life of landfills, Enck said, adding that leaking landfills present a hazard that can pollute groundwater.

A number of municipalities are asking residents and businesses that put their trash out for pickup to separate trees and other plant material from debris such as shingles, fences and roofing materials.

Florida Today offered these guidelines for preparing storm debris for pickup:

  • Debris should be placed on the curbside, but not in the road or on a sidewalk.
  • Debris should be sorted into separate piles—such as piles for vegetation, for wooden construction debris and for metal construction debris—to help speed up the pickup process.
  • Vegetation and other debris should be cut into sections no longer than 4 feet.
  • Do not use bags for yard waste, as it makes it impossible to recycle or mulch.
  • Do not put yard waste on top of storm drains, as it could block receding waters from Hurricane Irma flooding.
  • Neatly stack construction and demolition debris (drywall, roof shingles, siding, carpet, fencing and docks).
  • Never place debris next to utility poles or transformers, under power lines, on top of water meters, by fire hydrants, near vehicles, next to mailboxes or fences.
  • Do not place debris on other people’s property.

Hurricane Flooding Affecting Agricultural Supply Chains

The trillions of gallons of water dumped by Hurricane Harvey on Texas and Louisiana and Hurricane Irma in Florida have created major problems for agricultural producers in these states. The damage is expected to affect supply chains in for businesses including grocery chains, restaurants and livestock ranches as massive rainfall and flooding have interrupted harvesting cycles for crops like wheat, rice, corn and citrus fruits. Short-term economic losses are already being estimated, while concerns persist about the storm’s long-term effect on crops, soil and machinery.

According to the United States Department of Agriculture’s (USDA) Economic Research Service, Louisiana and Texas are respectively the third and fifth-largest rice producers in the United States. While Louisiana planted almost 400,000 acres of rice this year, LSU AgCenter extension rice specialist Dustin Harrell said a recent survey revealed that only about 10,000 acres of first-crop rice remains left for harvest in south Louisiana. “The big unknown at the moment is the ratoon rice in that area,” Harrell said. Ratoon rice is a staple for many companies which grows from the remnants of what has already been harvested. “[It’s] very important economically and it, too, can be lost if the ratoon stubble remains submerged for several days.”

For Texas growers, some experts estimate that a substantial portion of their rice crop is completely unusable. “I estimate 80% of the Texas rice crop (170,000 acres) was cut before the storm hit and the remainder is totally lost. Rain normally makes grain, but this is so much more than rain,” said Dwight Roberts, president and CEO of the U.S. Rice Producers Association located in Houston. “[As of Aug. 29] it’s hard to really even know the condition of harvested rice. We’ve got broken communication, no electricity for some areas, and flooded storage in places. There are so many unknowns.”

In a statement issued by the Food and Drug Administration (FDA) on Sept. 14, commissioner Scott Gottlieb acknowledged that rice harvested following Harvey faces risk of contamination. He said steps are being taken to prevent affected rice from being passed on to consumers or animals that could consume these crops, since broken grain can be used for pet food. He made particular mention of the Texas rice crop, saying that so far the agency had “not issued a ban on rice or any other food crops,” adding that rice grown in normal conditions and rice that has not been exposed to contaminated floodwaters may enter commerce. “Also, rice and other crops that were harvested and stored safely before storms hit should not be considered impacted by these events,” he said. 

The storms affected another key commodity: citrus fruits. The USDA ranks Florida and Texas as the respective first- and third-largest producers of oranges and grapefruits, and the storms took a bite out of their crops as well. Florida’s grapefruit harvest was already estimated to be the lowest in 50 years, with growers and experts expecting near-35% percent losses in the top-producing districts. According to USA Today, specific varieties of oranges like navel and Valencia might see a 25-to-35% loss.

“That puts every grower on the East Coast in red ink” for this year, said Andy Taylor, senior vice president and chief financial officer for the world’s largest grapefruit processer, Vero Beach-based Peace River Citrus Products Inc. “Efforts to salvage some of that and get it processed into juice,” however, are unlikely to save even 10% of the fruit dropped, Taylor added.

During his press conference, Gottlieb said the FDA has dispatched experts to work with state regulators and directly with producers to address questions and concerns about mold and other contaminants. He also recognized the need to get boots on the ground in order to assess the quality of the crops, “or else crops that might be safe—because they were not exposed to contaminated floodwaters—could age past their point of use.”

The FDA distributed resource guides in reaction to the storms. For more general information on evaluating the safety of food and animal food crops exposed to flood waters, visit here. A QA on crops harvested from flooded fields intended for animal food can be found here.

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.