Mitigating Risk and Protecting our Cities from Disaster

On August 28, 2019, a few days before the anticipated landfall of Hurricane Dorian (the strongest on record to strike the Bahamas), the Florida Action Committee issued a press release: “As Hurricane Dorian approaches, don’t wait until the last minute”. It warned people of the complications of emergency evacuations and to not delay making plans. Despite such ominous warnings, about a dozen people in Volusia County decided to ride out the storm together and coordinate over walkie-talkies. This wasn’t limited to just one county, people in many others did the same.

What drives these foolhardy decisions? I believe without more awareness about the specific risks as it applies to them in particular, humans tend to overlook them. Such fallacies are not too uncommon, and in the past have resulted in the loss of life and property: the cost of inaction is deadly.

With an increase in the frequency and severity of extreme events, more population and economic value is at risk. While technological advancements have leapfrogged in recent years, innovations are required at every step of the way to tackle challenges facing the cities of the future.

“While technological advancements have leapfrogged in recent years, innovations are required at every step of the way to tackle challenges facing the cities of the future.”

Innovation at a city-level

By 2050, it is expected that nearly 6.5 billion people will be living in cities. City planners need access to a variety of tools and technologies for their day-to-day decisions to become more efficient. For example, being able to access insights about aging infrastructure at their fingertips (e.g. bridges that could create bottlenecks during an evacuation) could help them better plan disaster recovery. It is also useful for efficient deployment of capital. Adapt Ready’s risk intelligence platform provides such insights including satellite imagery, historical flood elevation data, and more.

In addition to flood and earthquake zones, cities can better anticipate the risks when such city-level data is combined with insurance loss data. Answering questions such as “what type of residences had significant loss from flooding in the last 25 years?” could give regulators new material to improve building standards, while big data analysis of traffic could help in planning more efficient evacuation routes, last-mile connectivity to public transportation, and reducing inner city congestion.

 

Innovation for the citizens

The most vulnerable communities are among the first to be greatly affected during and after a hazardous event. While cities are getting better at hazard mapping, despite an increase in extreme events, people continue to invest in properties that may be at risk in the near future – and more so in coastal regions.

At Adapt Ready, we recently conducted a study that concluded that two-thirds of the population welcome preventive communication – which could be from their insurance companies, city governments, and so on. With cutting-edge technology, such information can be made readily available – and this could not only help save lives and mitigate losses in the long term, it can also prove useful during times of an emergency, with information about the closest shelters, hospitals, transport points, insurance coverage, and so on – all of which helps them in making a timely decision.

In countries like India, China, and Nigeria – where insurance penetration is low (but often, the risks are higher) – people have ready access to data-enabled smartphones and feature phones on which such awareness about risks can easily be delivered. An added benefit of raising awareness of risks at the time of purchasing or renting a property, is that it helps individuals choose the type of insurance products or coverage that relates directly to the risks they face, and thus reduce the number of uninsured and under-insured individuals.

Knowing the magnitude of potential losses could make it more significant: this sort of increased awareness enables better decision-making, such as not riding out a category 5 hurricane.

 

Innovation for businesses

While the loss of life from disasters is more or less under control thanks to improved alerting, the loss from property damage and impact to businesses has been increasing. The very drivers of economic growth in cities are at a greater risk than ever before, and the stoppage of work could affect many low-income and vulnerable groups. Business continuity is good, not just for companies but for society as a whole.

Therefore, businesses could also benefit from increased awareness of risks at every point of commerce – from their supply chain and customers, to employees. During and after an event, the most immediate goal of a business is to limit the extent of loss and recover quickly. Our platform revealed that across just two counties in Florida, nearly 50,000 businesses, small and medium sized enterprises as well as large corporate companies, were at risk during Hurricane Dorian.

Additional innovation is necessary in effective emergency planning. Had Arkema, a French chemical company, maintained proper planning based on the products being manufactured at its Crosby, Texas plant, it may have avoided the EPA fines it had paid in the months prior to the plant’s explosion during Hurricane Harvey. It could have possibly even avoided lawsuits from the 660 people living in the vicinity who suffered respiratory problems, pneumonia, headaches, nausea, and dizziness from the explosion. In addition, the plant was closed for several days, and Adapt Ready’s post-event analysis projected a potential economic impact of $34 million to the company. A few months after the incident, Arkema noted in a regulatory filing that the ultimate cost was near 26 million euros or approximately $31 million dollars.

Giving society a sense of the cost and extent of destruction as specific as possible to the individual, building, or business, and in effect making it a sufficiently shared problem could spur action and increase resilience. In turn, the public and private sectors could benefit from reduced premiums for increased building standards and improving their emergency planning.

Technology has already been playing a major role in building smart cities of the future, but with ever more access to data and the involvement of insurance companies that act as society’s risk managers, there are many more opportunities in building resilient cities, and this is just the beginning.