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02 Feb 15 14:03

In basketball terms, Juno gave us a little head fake and drove the other way. While New York City escaped the worst (not even in the top 25 for all time snowfall) the storm raked the New England states—dumping three feet of snow in some places, dusting up six-foot drifts and stirring waves big enough to sweep homes off their foundations.

Before the last snowplow is parked and the skies begin to lift people were already hard at work assessing the cost of recovery—and what may never be regained. The Weather Channel puts it in terms insurers can appreciate: “Northeast blizzards aren't just snowfall amounts: They're high winds, they're storm surge, they're epic traffic jams, they're days-long power outages. Arguably a storm doesn't have to break all-time records to have historic impacts if it brings a crippling combination of disruption and destruction.”[1]

We may look back on Juno not as the storm that brought New York to its knees, but one that shed new light on the aforementioned “disruption,” or business interruption.

It started before the first snowflake fell. Acting out of extreme caution and concern for public safety, officials ordered subways closed and taxis off the streets. Then Juno shifted its track and when the brunt of the storm missed the City many realized they could have easily reached their destinations and made their appointments. Some blamed public officials for overreacting, complaining that shutting down critical transportation systems had a paralyzing effect on the ability to move about and conduct business. While the decision to take such precautionary measures is seen by public officials and emergency managers as a necessary step to protect lives, disruptions of this nature can certainly result in lost revenue and even have a “chilling” effect on the economy and the insurance industry.

The intangible losses—things that didn’t get done, or produced, or shipped, things that stalled temporarily when the storm struck—can be a drag on the economy. Before we close the book on winter, which is far from over, it’s wise to consider the impact of the winter storms of 2014. The Bureau of Economic Analysis cites the “disruptive effect”of severe weather as the main cause of underwhelming GDP growth—just 0.1percent in the first quarter, far less than the 2.6 percent increase in the previous quarter.[2]

Regardless of whether the mayor stops the train or storm surge floods the substation powering the train, a question of growing importance these days is do we truly know everything that’s lost? As the number of billion dollar storms continues to grow so do the unknowns. Business processes are growing more complex and interdependencies are multiplying, spawning a seemingly infinite number of knock-on effects that don’t get captured when the numbers are added up. Climatologist Adam Smith of the National Oceanic and Atmospheric Administration (NOAA) describes them as minutes and hours of lost worker productivity that accrue but don’t get counted “due to the inherent complexity and data limitations.”

Pondering the unknowable is like the dog chasing its tail, and our time is better spent pursuing tangible measures. We know that making our cities more resilient in the face of severe events will reduce both disruption and destruction. We’re learning to adapt and work with nature rather than against it, and it’s important to stop and take note of positive actions underway that will yield benefits in the future.

For example, Hurricane Sandy triggered a thorough reassessment of the state of infrastructure. Every government agency entrusted with providing essential services was forced to rethink design and construction. One example is New Jersey Transit, which is rebuilding its electrical substations on higher ground and considering building its own micro-grid to power ongoing operations in the event of a commercial grid failure. Anything that keeps the trains running during the storm and in the days after goes a long way toward keeping business on track.


Category: Climate/natural disasters: Disaster risk


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