Risk Management for Natural Disasters

Four ways to counter the hidden costs

hy do so many businesses fail after surviving a disaster? Because the true costs of the disaster are misunderstood.

After the 1994 earthquake in the Northridge neighborhood of Los Angeles, many businesses that had survived relatively unscathed found their revenues declining. Prior to the quake the affluent community had experienced a minor population exodus as the aerospace industry declined in response to lower government spending. Many people who had lost their jobs and were close to retirement saw the earthquake as the last straw and moved away. With abundant housing available there was a change in demographics. Companies that failed to recognize and adapt to the more diverse population went out of business.

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Plus a 5th way to counter evident costs

In other words, managing risk is no amateur pastime, it takes professionality. I'm no professional in risk management but I'm a risk fan, in that I believe that risks are lessons to be learned from. Maybe going too trivial, the 1969 movie Krakatoa - East of Java may have taught us something on gigantic volcano eruptions and aftercoming tsnunamis, as well as the more recent Frank Schatzing's book Der Schwarm (The Swarm), on deep ocean drilling, and so on, and so on. One cannot build his house on sand and pretend it withstands earthquakes. Hidden costs are more like hidden ostrichs' heads therefore: the little monkey has put its paws on its eyes, not to see. I am involved in contingency / emergency planning & predictability projects, therefore, I think I know what I'm speaking of. Thank you.