Natural disasters upend the lives of local residents and create a substantial expense for the community. From hurricanes and earthquakes to droughts and floods, major weather and climate events can leave billions of dollars worth of damage in their wake.
While natural disasters have always occurred, data suggests that weather-related events are increasing. According to the National Centers for Environmental Information (NCEI), between 2010-2019 there were 131 climate and weather events that cost $1 billion or more, costing an average of $96.4 billion per year. There have been 90 events in the last 5 years (2018-2022), costing on average $124.1 billion per year.
In 2022, the National Oceanic and Atmospheric Association (NOAA) reported 18 separate weather or climate-related disaster events with losses exceeding $1 billion. These natural disasters caused at least 474 direct or indirect deaths – the 8th most disaster-related fatalities for the contiguous US since 1980 – and significant economic effects on the areas impacted.
The Effects of Natural Disasters on Businesses
Natural and man-made disasters, such as the 2020 wildfires across the state of California have catastrophic effects on the local economy. The fires destroyed 11,116 structures, many of which were commercial buildings. Along with the loss of 33 lives, overall economic losses were more than $19 billion with firefighting costs of over $2 billion.
Natural disasters impact everyone in a community. While residents are eventually able to get back to life as normal, for many businesses, it’s a hard road to recovery. Businesses suffer from direct expenses due to renovating damaged property and equipment, as well as indirect expenses from lost revenue.
It’s important for businesses, especially small businesses, to get back on their feet as soon as possible to minimize economic damage. According to FEMA, as many as 40 percent of small businesses never reopen after a disaster and another 25 percent, that do reopen, fail within a year.
Here's a closer look at the effects of natural disasters on businesses:
- Supply Chain Disruptions: Efficient and reliable supply chains are critical to the success of a company. Natural disasters can affect roads, bridges, and airports which means moving goods and services in affected areas is impossible.
- Damaged Buildings: Significant damage to commercial buildings leading to costly repairs and loss of revenue.
- Loss of Equipment: The cost of replacing damaged equipment, in addition to funding renovations, can cripple a business’s efforts to reopen.
- Loss of Personnel: Injuries, relocations, and even deaths due to disasters can suddenly reduce a well-trained workforce.
- Loss of Clients: Natural disasters often cause people to move away from the affected area and clients are often focused on their own recovery.
Safety Measures During Natural Catastrophes
To survive the economic effects of a natural disaster, a business must prepare for emergencies and take steps to prevent, or minimize damage. The first step is to create a natural disaster action plan also known as an emergency action plan (EAP). The Occupational Safety and Health Administration (OSHA) says the purpose of an EAP is “to facilitate and organize employer and employee actions during workplace emergencies.”
The EAP should include the following steps:
- Identify Critical Assets: This includes physical equipment, data, and personal needed in order to stay in business. Identify those critical assets and list them.
- List Possible Disasters: Think about the types of disasters that can affect the business. This can be fire, tornado, flooding, etc. Rank them in order of likelihood.
- Plan to Protect Your Critical Assets: Think about how each disaster would affect your critical assets. List methods on how to protect them or find alternative solutions if you have to do without them.
- Make a Plan for Employees: Have an idea for what employees should do in any kind of emergency. Make it clear on where they go, what they need to do, and how to keep them safe.
- Make a Communication Plan: Develop a system for keeping everyone's contact information and backup contact information up-to-date.
- Back-Up Systems and Data: This applies even if your company is not a tech firm. Client data, reports, financial information, or other digital assets are critical business operations. Backup everything on a regular basis in multiple locations.
- Alternative Location: If the main business location is out of commission for a while, you will need a new base location in order to coordinate recovery efforts. Don’t wait until the disaster strikes to find a temporary location.
- Test the Plan: Practice makes perfect. Simulate an emergency so that all employees have training and practice. Appoint leaders and extensively train and brief them on what to do. These leaders can help other employees to follow the plan. Practice the plan regularly and refine it as needed.
Natural Disaster Mitigation Safety Equipment
There’s no way to prevent or predict every type of disaster. However, there are ways to reduce exposure to physical, chemical, and biological hazards. These hazards can present dangers to emergency personnel as well as employees during cleanup and recovery.
Chemical and biological spills can happen at any time, but they are more prevalent after a natural disaster. Oftentimes, flammable chemicals ignite fires, causing even more damage to the surrounding areas. Furthermore, chemical and biological spills can contaminate the local environment and water supply, prolonging cleanup efforts. An effective method to mitigate these hazards is to use the right safety storage equipment.
Safe Storage During Natural Disasters
The proper storage of chemical and biological hazards will reduce the risk of these hazardous elements from spilling when disaster strikes. These containers are designed to hold the hazards and guards against rupture or explosion.
- Safety cans are designed to contain hazardous liquids and control vapors that reduce the risk of fire.
- Safety cabinets are specifically designed cabinets that can be flame, chemical, or combustible resistant.
- Outdoor safety lockers provide immediate protection against chemical spills, fire, and poison hazards.
Once the disaster passes, the focus moves to clean up and recovery. Although most of the cleanup work may not be done directly by employees of larger businesses, small businesses will most likely have a more hands-on approach. Make sure you are stocked with personal protective equipment (PPE) designed for disaster cleanup and recovery.
OSHA recommends specific types of PPE depending on the nature of the disaster. Refer to the list of possible disasters in your emergency action to determine the best PPE to keep in stock or purchase.
Natural disasters can have a devastating effect on your business and the surrounding community. Having a plan in place will help your business recover faster and in turn, help your community get back on its feet.