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The 2023 Hurricane Season Outlook

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Atlantic hurricane season officially began recently, kicking off a disaster season that will run from June 1 through November 30. According to predictions from the National Oceanic and Atmospheric Administration (NOAA), the 2023 hurricane season will consist of 12 to 17 named storms, five to nine hurricanes and one to four major hurricanes. This falls into a fairly average range, but “average” is a bit unusual under the conditions currently emerging around the season.

“The upcoming Atlantic hurricane season is expected to be less active than recent years, due to competing factors—some that suppress storm development and some that fuel it—driving this year’s overall forecast for a near-normal season,” NOAA reported.

Hurricane researchers at Colorado State University notably marked the opening of the season with a revised forecast. After initially predicting slightly below-average hurricane activity in 2023, the researchers increased their estimates. Now, CSU is essentially predicting an average hurricane season, but one that is above-average for what is expected to be an El Niño year.

The last three hurricane seasons have been controlled by La Niña, which typically leads to more hurricane activity. While El Niño would typically help reduce such activity, current warmer water temperatures could ultimately cancel out most of that effect.

“While we anticipate a robust El Niño for the peak of the Atlantic hurricane season, the tropical and subtropical Atlantic have continued to anomalously warm to near-record levels,” CSU researchers explained. “El Niño increases vertical wind shear in the Caribbean and tropical Atlantic, but the anomalous warmth in the tropical and subtropical Atlantic may counteract some of the typical El Niño-driven increase in vertical wind shear.”

CSU anticipates 15 named storms, seven hurricanes and three major hurricanes, which is right in line with the NOAA forecasts. However, CSU forecasters noted that this year’s outlook includes particular uncertainty due to these conflicting factors.

As the hurricane season gets underway, the following tips can help businesses update and strengthen natural disaster recovery plans:

Review your business interruption insurance. Business interruption insurance coverage plays a critical role in helping ensure complete recovery from a storm. BI coverage relies on accurately reported business values, however, and recent changes in property values, replacement and repair costs, and inflation all impact those current values. To avoid the risk of being severely underinsured, make sure your coverage has up-to-date valuations so that claims payouts will be robust enough to rebuild your business. Check out the May/June issue of Risk Management for more information about the importance of accurate business interruption values and best practices for preparing a business interruption claim. 

Update your current disaster recovery plan. It is crucial to keep your natural disaster recovery plan updated. Organizations have gone through massive change over the past few years, including different work locations due to hybrid or remote work, staffing changes, and new technology that may aid in emergency response. Ensure your organization’s disaster recovery plan reflects your current personnel, equipment, insurance policies and contacts, and make sure to distribute it among all current members of any emergency response teams or other key stakeholders.

Do a dry run. The only real way to know if your disaster recovery plan works is to put it to use, and you do not want to wait until a natural disaster is at hand to find out if it works. Practice various scenarios and have key players act out their roles to gauge the effectiveness of the plan and make changes accordingly.

Take preventative measures. To weather disaster response well, disaster preparation is essential. Take steps now to ensure the organization will be able to operate as smoothly as possible during or in the immediate wake of a disaster. Back up data offsite or in the cloud, verify that multiple employees know how to handle certain tasks and ensure you have backup options to contact employees if primary communication channels are interrupted.

For more information on hurricane preparation and natural disaster recovery, check out these other pieces from Risk Management:

Recovery in the Aftermath of a Hurricane

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The 2022 hurricane season may be nearing its end, but it is clearly not over just yet. With Tropical Storm Nicole approaching landfall and expected to reach the U.S. as a Category 1 hurricane, Florida residents are once again in storm preparation mode and in the coming days, they will be dealing with the storm’s impact. The aftermath of a hurricane presents many risks—while the storm may be over, the danger is not. Any storm that damages power lines, gas lines or electrical systems, puts you and your business at risk due to fire, electrocution or explosion.

Proceed With Caution

Even once we enter the recovery phase, it is important to take precautions in flooded areas. Never drive across flowing water; a few inches of water may cause you to lose control of your vehicle and as little as a foot of flowing water will carry away a small car. Similarly, avoid wading in floodwaters. They may be contaminated by agricultural or industrial chemicals, or hazardous agents. Remember that standing water can be dangerous as it may be electrically charged from underground or downed power lines.

Before entering a building that has suffered wind or flood damage, conduct a preliminary inspection to make sure it is stable. If there is extensive damage, have a professional engineer or architect certify that it is safe. A professional should also check the gas, water and electrical lines and appliances for damage.

When using a generator for building system power, be sure that the main circuit breaker is off and locked out prior to starting the generator and that there is no exposed electrical wiring or equipment. This will prevent inadvertent energizing of power lines or uninsulated circuitry and help protect utility line workers and building occupants from possible electrocution.

Rebuilding and Restoring

Damage to your business can have a dramatic and far-reaching impact, so it is best to be prepared for the worst. It is natural to want to get back to a storm-hit property as soon as possible, but a little extra caution can go a long way in these circumstances.

Once the property is deemed safe by local officials, specially trained recovery teams in appropriate personal protective equipment can help assess the damage and work with management to implement an action plan to safely get your business back up and running. It is important to photograph and document all damage and notify your insurance agent as soon as possible. Then you can proceed to make temporary repairs to protect the building and its contents.

Preparing for the Future

An average hurricane season produces 14 named storms, of which seven become hurricanes, and three become major hurricanes. Recovery is never a one-and-done proposition—there will always be other hurricanes and hurricane seasons. Regardless of whether or not you experienced damage this year, if your business is in a hurricane prone area, or has the potential for a hurricane, you need to put your hurricane preparedness plan into action by building your hurricane kits, gathering needed supplies, and training your employees in pre- and post-hurricane activities. Do not wait for the next storm to form, as, it becomes increasingly more difficult to acquire the necessary equipment and supplies for your location once a warning has been issued and a storm looming in the not-too-far distance. 

NOAA’s main function is to monitor weather and distribute alerts and warnings. Since 2019, NOAA has been utilizing models that provide a more realistic expected arrival times for storms. Having the ability to better pinpoint a storm’s arrival enables businesses to better prepare their locations and their people for the impeding storm. This technology also helps to reduce loss-of-life and injury, in addition to the potential catastrophic financial impact a hurricane can have on a business.

The recovery period that storm-impacted Florida businesses are in following this year’s storms presents a great opportunity for learning. It is essential that organizations have a process in place to assess weaknesses and strengths in their hurricane readiness plan before the next event. What went well before, during and after the storm? What can be improved or implemented to address any unexpected challenges from this event?

If history has taught us anything, it is that a common thread across the responses to all natural disasters is a lack of awareness and preparation. As one of nature’s most destructive events, hurricanes are powerful and far-reaching, often causing dangerous storm surges that can be felt hundreds of miles inland. With potential maximum wind speeds of 200 mph and the ability to drop more than 2.4 trillion gallons of water in a single day, hurricanes are not to be taken lightly. By identifying areas of vulnerability and taking actions to prepare, businesses can potentially reduce the impacts of a catastrophic hurricane.

Recovery Tips in the Wake of Hurricane Ian and Hurricane Fiona

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Across the Caribbean, Florida, and up the Eastern seaboard to Atlantic Canada, communities are facing devastation from a recent—and ongoing—spate of mid-season hurricanes.

After making landfall in Western Florida yesterday as a Category 4 hurricane, Hurricane Ian has been cutting a path of destruction across the state and will make its way into the Carolinas. According to very early reports as the disaster rages on, President Biden said Thursday, “This could be the deadliest storm in Florida history. The numbers we have are still unclear, but we’re hearing early reports of what may be substantial loss of life.” Millions of Floridians do not have power, and officials on the ground report “historic” amounts of storm damage.

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As of Thursday afternoon, Ian also appeared to be regaining strength. After weakening into a tropical storm over central Florida, the storm’s winds strengthened to over 70 miles per hour and it was expected to return to hurricane strength.

Ian follows right on the heels of catastrophic damage from Hurricane Fiona. In the Caribbean, 20% of residents in Puerto Rico are still without power after Hurricane Fiona, and the island took another pummeling from Hurricane Ian while it was a Category 4 storm. To the north, post-tropical storm Fiona inflicted catastrophic damage across parts of eastern Canada last week, causing devastating property damage and leaving hundreds of thousands of Canadians without power. While it is too early for complete estimates, ratings agency DBRS Morningstar projected the insured losses may fall in the range of $300 million to $700 million. According to Patrick Douville, DBRS’s vice president of insurance, “Fiona will likely be one of the largest catastrophic events in history for Atlantic Canada.”

Once it is safe to do so, risk managers will have considerable work to do to help their organizations and communities recover.

“There are several ways to prepare to work with insurers and focus on recovery in the face of losses,” said Jill Dalton, the group managing director for Property Risk Consulting at Aon.

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“First, get the adjuster to the site as soon as possible. In the meantime, take photos of the damage and do whatever you can to mitigate further damage. It is also important that a business establishes a single point of contact for talking with the adjuster, broker claims person, and others that will be dealing with the claim on the site. Then, establish a cadence for communication and timing for informing stakeholders like the C-suite. For instance, this might be twice a day for the next week, once a day following week and then weekly.”

Dalton advised, “Additional steps businesses should take include engaging a professional claims preparation firm to help document the claim, preparing a daily timeline of impact and changes to operational activities, asking for a cash advance, and setting up a cost tracking code and/or general ledger account to capture incident-related expenses. If it’s a contingent loss, meaning operations are down because of physical damage to a customer or supplier, ask that customer or supplier send you documentation of their physical damage and ask them to communicate with you as much as possible.”

In the July/August cover story from Risk Management Magazine, “Hurricane Claims: Key Tips to Minimize Losses and Maximize Recovery,”attorneys Andrea DeField and Alice Weeks offered guidance on steps for risk and insurance professionals to take before, during and after hurricanes, including hurricane preparation and response checklists.

For organizations impacted by this season’s storms, the following post-storm tips can help risk professionals navigate disaster recovery and the claims management process:

Post-Storm Checklist

  1. Gather insurance policies and related insurance records. If your policy was destroyed or is lost, contact your insurance company or agent/broker to request a copy.
  2. Contact other business partners who may have copies of your insurance policies and records, such as attorneys and accountants.
  3. Give written notice to your broker and insurer immediately. Notice should provide the following basic information:
    1. Name and address of insured
    1. Location of loss
    1. Date and time of loss
    1. Contact name, phone and fax number
    1. Brief description of the loss
  4. Acquire copies of police or fire reports from your local police or fire department, if applicable. If individuals caused damage to the premises or stole anything in the wake of the disaster, obtain a separate police report about the damage or losses or request that additional information be added to the initial report.
  5. Secure vital records and ledgers. Ensure that your accounting department opens a separate general ledger for hurricane-related expenses.
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  6. Collect photos or videos as proof of damage. Ensure these are taken before any mitigations are implemented so that they accurately capture the aftermath and losses.
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  7. To the extent possible, take steps to mitigate any further damage once the storm has passed.
  8. If you have not already, retain a forensic accountant to begin preparing your business income and extra expense loss calculations.
  9. Prepare a proof of loss. A proof of loss provides details identifying the property destroyed or damaged, and documents the amount of loss incurred. Generally, any information substantiating the claim can become part of your proof of claim, including photos, videos, receipts and records. Check with your insurer for the specific information required as some companies may ask for a detailed list of documents or require you to fill out a specific proof of loss form.
  10. Submit proof of loss, photos, and reports to your insurer. Be sure to check any time limitations on the submission of a proof of loss and request an extension, if needed.
  11. Assist with the insurance company’s investigation. Property policies typically allow the insurer to conduct a reasonable investigation of the claim and require the insured’s cooperation. This may be in a provision titled “Duties in the Event of Loss” that allows the insurer to interview the policyholder claimants in a process called an “examination under oath.” The policy may also require the insured to exhibit the property, take reasonable steps to protect it, and generally cooperate with the insurer’s investigation. The insurer’s requests for information must typically be considered reasonable, however. A policyholder’s failure to reasonably cooperate could be used by the insurer as a defense to coverage.

Building Effective IT Disaster Recovery Plans

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No matter how well-managed IT infrastructure is, there is always the risk that a tiny hiccup could ultimately turn into a real emergency. Given the increasing reliance on technology tools and access to business-critical data to continue operations, every business should have an effective IT disaster recovery plan in place to minimize disruption when disaster strikes. Risk professionals must consider and plan for this situation with regular testing and run-throughs to ensure that all team members understand the recovery plan and know their responsibilities.

As natural disaster season begins, risk professionals should assess the risks and mitigation strategies in place to minimize disruption and losses. The following tips can help ensure that IT disaster recovery plans are as effective as possible:

Plan in the Risk Management Context

Instead of thinking too much about what a disaster would mean for your company, frame your recovery plan in the context of risks. Start by examining which risks your company faces, and what steps you can take to minimize each one. This will ensure that all teams are fully aware of what the risks are, and how they can make a difference in eliminating potential problems.

Prioritize Communication

Nothing exacerbates a disaster like a communications breakdown, so all good recovery plans should focus on communication. The onset of an IT disaster could impact communication systems, so plan an alternative way of communicating with teams in the event of an emergency. Ensure that all team members know the backup communication method, and that everyone understands who they need to contact to inform them of the situation. 

Protect Data Continuity and Backups

Data continuity planning is critical to minimize losses during a crisis. At its essence, data continuity ensures companies have alternative processes and infrastructure in place to allow key IT operations to remain intact, taking into account both hardware and software. A first step is often to invest in failover systems across multiple locations as well as backup generators and power supplies, and ensuring you keep them all in working order.

Data continuity also involves backing up all important data and storing it in a location away from potential disruption. Methods range from server replication to continuous protection (continually backing up data on a separate server). For data back-ups, businesses often choose disk-to-tape or disk-to-cloud models. Either way, the most crucial element of backing up data is knowing what to replicate and what to leave. Archiving everything available can mean greater expense, but being selective can increase the risk of losing information. The rule of thumb is that, as a minimum, any backed-up data should be capable of restarting business operations from scratch.

Define Acceptable Downtime 

The amount of downtime that a company can feasibly take varies considerably depending on the company’s size and the products or services it provides. Think about how a disaster could affect your company, then decide on the steps that you’d need to take in different potential scenarios. In most cases, a few minutes of downtime rarely constitutes a total disaster, so focusing on recovery plans that can get systems back up and running as quickly as possible will help keep losses as low as possible. Cloud-based technology can be very helpful in such disaster scenarios since data is off-site and services stay operational even if your physical location is impacted.