Disaster on Disaster: Unique Challenges for Natural Catastrophe Preparedness in 2021

Hilary Tuttle


May 3, 2021

For more from our May issue on natural disaster planning in 2021, check out:
Remote Workforce Considerations for Natural Disaster Preparation

Heading into the 2021 hurricane and natural disaster seasons, organizations must reassess their risk profile with regard to remote or hybrid workforces to ensure the safety of both operations and employees.

Q&A: How Texas Roadhouse Takes a People-First Approach to Disaster Planning

Patrick Sterling and Matt McMahan from Texas Roadhouse sat down with Risk Management to share some of the lessons they have learned from managing disasters across 600 locations over the past year, preparations for natural disasters in 2021, and insight into building a people-first playbook for times of crisis.

While the rapidly evolving COVID-19 pandemic upended operations around the world last year, enterprises had to scramble to prepare for hurricanes, typhoons, wildfires and other natural disasters. As a result, many had to put together more ad hoc measures than usual to account for shuttered physical locations, strained supply chains, already interrupted or diminished business, and a workforce that was either adapting to new remote arrangements or was struggling with the danger of showing up every day.

With lessons learned from 2020’s hurricane season and pandemic response, and the ability to do more advance planning for this season, how are risk professionals preparing differently for natural disasters in 2021? How can enterprises better care for employees facing disaster on top of disaster this year?

After the critical tests of disaster preparation, crisis planning and emergency response in 2020, many risk professionals have learned key lessons about safeguarding employees and operations. Expectations have adjusted accordingly, and as the crisis has begun to stabilize, enterprises face a very different climate when addressing natural disasters in 2021.

“At this stage of the pandemic, customers and boards have expectations that companies must operate differently in this COVID-19 environment,” said Jim MacDonnell, director in the crisis management and business continuity practice at professional services firm BDO. “Additionally, as businesses seek to mitigate their own risk, we are seeing increased resilience expectations in the vendor selection and contracting processes. If you cannot effectively communicate the lessons you have learned from COVID-19 to prevent or mitigate future disruptions, you are likely behind your peers. Well-developed risk management and contingency plans have become expected in many industries.”

2020 Lessons and 2021 Disaster Outlook

The 2020 Atlantic hurricane season set a new record for activity with 30 named storms, including 12 that directly hit the United States, surpassing the previous record of nine in 1916. Globally, Swiss Re reports natural catastrophes in 2020 caused $190 billion in economic damages and $81 billion in insured losses, the fifth-highest total since 1970. 

“We saw in 2020 that Mother Nature doesn’t take a break simply because there is a global pandemic,” said Scott Carpinteri, senior structurer of innovative risk solutions at Swiss Re Corporate Solutions. “We saw a record-breaking number of hurricanes and many underwent rapid intensification, meaning that those in harm’s way had very little time to prepare and evacuate.”

Meteorologists expect another hurricane season of above-average activity in 2021. AccuWeather’s team predicts 16 to 20 named storms, including seven to 10 hurricanes, of which three to five may be stronger than a Category 3.

Enterprises should not assume that the measures they pieced together to survive last year will perform the same way in 2021. “COVID-19 has been so disruptive that many companies feel that they are battle-tested and ready to handle anything,” MacDonnell said. “While they may be better equipped to handle the next crisis, it’s still important to make informed decisions in the moment and handle scenarios on a case-by-case basis.”

Last year’s tests shone a spotlight on risk management and disaster response, and risk professionals should be preparing for that attention and heightened scrutiny to continue through 2021. “I believe COVID-19 created a heightened awareness from corporate C-suites related to business continuity planning, crisis management and enterprise risk management,” said Lance Ewing, vice president of enterprise risk management and operations at San Manuel Band of Mission Indians.

“I think companies and organizations should always be reviewing, updating and advancing their risk inventory list,” he advised. “What are the top 10 exposures that the C-suite is worried about, the top 10 of the shareholders, the top 10 of the employees and also the top 10 of your customers?”

Natural disasters fall somewhat uniquely at the nexus of concerns for these different stakeholders, and taking into account the risks and mitigations that speak to each group in the crisis response process will help generate truly robust plans with better odds of holding up when stress-tested by both C-suites and Mother Nature.

Preparing for Disaster

One of the most important distinctions in business continuity planning and natural disaster preparation in 2021 is that the current threat surface for enterprises could be fundamentally different than in previous years.

“The pandemic has greatly increased awareness that employees are critical to an organization’s supply chain,” Carpinteri said, pointing in particular to industries with highly skilled workers, such as tech and pharmaceuticals. “Going forward, business continuity plans will likely include more reliance on some employees being able to work remotely. However, continuity plans will also need to account for events impacting areas where employees live and work, not simply locations where the organization has assets and operations.”

Risk professionals should ensure they have a complete inventory of the locations from which employees are working, a means of monitoring this longer list of places at risk, and continuity measures for every type of work setting (see "Remote Workforce Considerations for Natural Disaster Preparation").

Disaster preparation and response are additionally complicated by decreases in the number of on-site workers, whether due to limited capacity, reduced workforces or a greater volume of personal emergencies. “It has made managing emergency response more challenging over the past year, as reduced personnel may expose companies’ premises to damage from natural catastrophes, delay business restart, and impair emergency response,” said Erik Olsen, vice president and executive property specialist at Chubb Risk Engineering Services.

“Implementing emergency response plans takes people,” he said. “Companies should ensure they have enough staff available to implement the emergency response plan. This could range from those familiar with setting up flood emergency response plans to having adequate staff for sufficient site security before, during and after an event.”

Companies should also be sure they explicitly communicate any changes in expectations for employees in the event of a crisis, advised Thomas Varney, regional manager of North America at Allianz Global Corporate and Specialty. For example, some staff may have previously come to aid in recovery efforts as soon as it was physically safe to do so. Now, that may not be safe or compliant with local regulations or company policies around capacity limits, social distancing and availability of personal protective equipment (PPE).

Given the tasks and physical proximity that may be involved in disaster recovery, he noted that companies should also establish policies now regarding what COVID testing or vaccination policies they will need to implement specifically for disaster-related activity on-site. While a company may not require its whole workforce to be vaccinated, for example, it might consider limiting on-site recovery activities to employees who have gotten COVID-19 vaccinations.

As many buyers and insurers made changes in 2020, it is particularly critical to review any new modifications to insurance polices before disaster season starts. Travel restrictions and pandemic-related loss of business both contributed to challenges in adjusting and settling insurance claims last year. Heading into the 2021 hurricane season, the pandemic has already left many enterprises less able to withstand more financial losses or endure prolonged or contested claims processes. “Budgets are stretched and many emergency ‘war chests’ are wiped out,” Carpinteri said. “There will be a temptation to reduce insurance spending in the name of tight budgets. However, this is the time that many are the most vulnerable and unable to withstand another hardship such as a major hurricane. An uninsured (or underinsured) event can have a lasting impact during this critical rebuilding year.”

Risk professionals should ensure they know what is or is not covered, and how that may have changed in the past year. “In this hard market, we have seen premiums and deductibles increasing with coverage decreasing,” said Drew Olson, partner in BDO’s forensic insurance and recovery practice. “Coverages especially hit hard are non-physical damage such as contingent time element, loss of attraction, civil authority and ingress/egress.”

Given the impact such lines can have in the wake of a natural catastrophe, it is critical for risk professionals to ensure details about any such changes are reported up within the organization. “Risk management teams should communicate the coverage changes now in advance of hurricane season rather than informing senior executives after an event occurs,” Olson advised. “And if you informed them after renewal, do it again as a reminder. Setting appropriate internal expectations is critical in our new environment.”

Supply Chain Strain and Recovery Services

“As we like to say in the crisis management business, having one crisis doesn’t prevent another one from arising,” MacDonnell said. “While the issues that we saw early on during the pandemic have subsided a bit, there continue to be several industries that are still struggling with supply chain issues stemming from COVID-19.”

Business continuity planning and disaster response must be reassessed with an eye toward the pandemic-related supply chain disruption that remains, and the potential for disruption to both supplies and services in the event of a natural catastrophe this year.

“The pandemic has complicated and decreased companies’ ease and flexibility to respond quickly to natural disasters. That’s why thoroughly considered business continuity and disaster recovery planning, in addition to supply-chain planning, is more critical than ever,” Olsen said. For example, he noted that the resurgence of the construction industry as the pandemic subsides has contributed to difficulty sourcing wood and lumber products, which could prove an issue when trying to board up windows ahead of an approaching hurricane.

Olsen has also seen many companies challenged by both capacity restrictions related to social distancing and talent shortages of workers experienced in disaster response. “Reduced occupancy and reduced availability of qualified personnel and contractors made planning for disaster response more challenging over the past year,” he said. “As the pandemic took hold, commercial properties operated with very lean building maintenance and engineering staff as well as stretched resources and time to prepare their properties for an incoming hurricane or windstorm event. Similarly, companies were challenged to find qualified contractors post-event, such as for repairs, cleanup, restoration services, etc.”

Ewing, who was executive vice president of global risk management for disaster services firm Cotton Holdings until December 2020, noted last year’s disaster season should serve as a critical lesson about the need to have a restoration company already under contract before disaster strikes. “Too many affected businesses had to wait until a quality restoration company was available after hurricane damage,” he explained. “It is also critical to read your insurance policies—the time to figure out what was excluded is not when the wind has already blown the roof off your building.”

He also noted lessons from the shortages in emergency response supplies and government aid. Cities, states and federal governments around the world were clearly overburdened with disaster response throughout 2020, and that was often just from responding to the pandemic, let alone additional natural catastrophes. Moving forward, businesses should anticipate potential aid delays and develop the capacity to address their own needs for emergency services or supplies in the immediate aftermath of catastrophe. “You need to be self-reliant,” Ewing urged. “While the government says they are going to help—and may be able to at some point—the first week or more is going to be on your business continuity plan and crisis management team.”

Staying Plugged In

Many companies are turning to new or enhanced technology tools to mitigate risk while employees are more dispersed and on-site staffing is reduced.

According to Olsen, internet of things (IoT) products are helping fill in monitoring gaps for physical premises. “Chubb encourages our clients to educate themselves on and consider installing IoT sensors and devices to enable better property protection,” he said. “For example, IoT water detection and relative humidity and temperature sensors help companies increase their knowledge about the property’s environmental conditions, especially with current reductions of on-site manpower.”

These tools can also help enhance risk management capabilities for risk professionals who are operating remotely. He explained, “These IoT devices enable easy communication through smartphones, and notification is half the battle when responding to an event, especially when staff is located remotely or on-site personnel is reduced.”

Enterprises are also expanding their monitoring capabilities to proactively identify potential threats in relevant areas and track risk in real-time. This is particularly helpful as companies face a broader range of physical locations that require monitoring to account for remote workers, to enhance oversight of supply chain risks, or to scale risk management efforts with business expansion.

For example, Texas Roadhouse uses a threat monitoring system and geolocation to track risks across the chain’s approximately 600 restaurants, according to Matt McMahan, senior manager of business continuity and records. This helps ensure the team in the support center is aware of threats to each store and can provide relevant communication to support the managing partners operating potentially impacted restaurants or the employees who may be facing disaster in the region.

As communication is often threatened under disaster conditions, many organizations are also looking into new ways to ensure employees can stay in touch, whether as a matter of business continuity or to execute disaster response plans.

“We have seen an increased focus on automation of crisis management and business continuity capabilities,” MacDonnell said. “Having plans, call trees and other documentation available or mobile applications has proven to be of increasing importance.”

According to Patrick Sterling, senior director of legendary people and risk management at Texas Roadhouse, cross-functional collaboration proved especially critical over the past year in ensuring communication throughout the company, facilitating creative and comprehensive problem-solving, and resolving issues promptly. Deploying collaboration technology and platforms such as Microsoft Teams helped the organization facilitate these multi-department efforts. “Everyone has access to critical documents, they can edit documents, view meeting notes, etc., so it’s a one-stop shop and that was very helpful,” Sterling said. “Then, as far as business continuity plan modifications, we were also able to capture our lessons learned along the way and make updates in near real-time. This resulted in a much more detailed plan that became an everyday resource that will help guide and speed up our future responses.”

Sterling champions this all-hands approach throughout the crisis response process. For example, he believes it is critical to have every person involved in the emergency checklist on each crisis response team call, such as standing group check-ins during a disaster. “Whether it’s IT, purchasing, human resources, accounting, payroll—they’re all on that call to be able to answer questions and to support our operators, so if there is a question that somebody has or a special need, they have that resource right there for them,” he explained.

Better Care for Workers

When facing natural disasters in 2021, it is critical for companies to bear in mind that we have all already been laboring under disaster conditions for the past year. The added impact of natural catastrophe threats can easily be too much to handle, whether emotionally or functionally. Now more than ever, companies must assess how to better care for their most important assets: their people.

“Be genuinely concerned about their well-being both at work and at home,” Ewing urged. “Employees want to know, ‘Am I being heard?’ Care, concern, follow-up and listening are not just an HR function during a crisis—they are required of all levels of management.”

Some organizations are considering more robust measures to care for employees facing natural disasters. Such investments in personal well-being can not only benefit individual workers, but also boost morale and productivity, safeguard operations, and help ensure business continuity. Over the past year, MacDonnell and Olson have seen some of BDO’s clients make a broad range of investments to personally help workers at home, for example, providing mobile hot spots or offering individual and family preparedness classes.

In shoring up defenses against disaster, it can be helpful for risk professionals to safeguard infrastructure, and approach protecting employees as an extension of supply chain or continuity planning. “COVID was a unique disaster in that infrastructure was largely unimpacted by the event: the electrical grid remained intact, the data grid continued to operate, water and sewage still flowed, and supplies were largely able to reach destinations,” Carpinteri said. “Following a natural disaster, one or more of these services may be out of commission for an extended period of time. As such, employee assistance will be critical for many organizations. For instance, we’ve seen petrochemical companies supply generators for their employees’ homes following hurricanes and widespread power outages.”

Investing in such critical enhancements can pay huge dividends to both the organization and employees. Various sources of funding may be available to execute these ideas, including different departments’ budget allocations or even some insurance. “Organizations need to consider how they will fund additional expenses such as employee assistance. Will this expense fall to risk management, human resources, or both? Planning ahead can save critical time in implementing necessary action following a disaster,” Carpinteri said. “Innovative new insurance policies such as parametric natural catastrophe insurance can also assist with this funding as the policies provide rapid funds following a natural catastrophe in a particular geographic area.”

Looking Back and Moving Forward

While the prospect of weathering natural disasters in 2021 seems more complex and potentially daunting than ever, risk management, emergency preparation and disaster response have made tremendous strides since the beginning of 2020. Reassessing business continuity planning a year into the COVID-19 pandemic also presents an opportunity to assess lessons learned and strengths gained. Ultimately, these may prove some of the most long-term advances for risk professionals in recent years.

“Watching businesses, government services, and nonprofits pivot during COVID gave me great hope for the adaptability of organizations and society,” Carpinteri said, pointing to the rapid innovation and technological adoption among retailers, governments’ operational adaptation, and nonprofits’ massive scaling up to meet enormous needs amid economic devastation.

“Each of these adjustments were a bit of a ‘crash course’ in risk management,” he said. “Too often we see organizations managing only the risks they themselves have previously experienced and not to the greater universe of what could happen. Going forward, organizations should use COVID as a lesson in being prepared for new challenges and not to fall into the trap of simply managing for ‘the next COVID,’ specifically.”

Carpinteri added, “If just some of these lessons work their way into planning for the future, we will see a society and organizations more prepared for not only smaller, more likely events, but larger, more remote ones too.”

Now, a year into the pandemic, Atlantic hurricane season is approaching, reminding risk professionals worldwide that they must prepare and refine their plans for another year of disasters against the backdrop of COVID-19. This time, many enterprises know more about the lay of the land with regard to the pandemic’s risks, and have resumed operations under modified conditions that will at least hold for the time being. With that improved stability, risk professionals are able to take a more deliberate approach to enhancing their emergency preparation and response plans to reflect the unique circumstances of doing business—and protecting that business—amid the pandemic.

Hilary Tuttle is managing editor of Risk Management.