Create a Win-Win Wind Situation to Survive

the Next Hurricane

Dr. Louis Gritzo

Vice President, Research

Agenda

• Hurricane risk is real• Loss is preventable• Simple, cost-effective solutions

Hurricane risk is real.

Hurricane risk is real.

• $9-Trillion exposed

• $8-Billion annual loss

• 7 of 10 in 5 years

Hurricane risk is real.

• All but Two have been Windstorms!

$6.1 $6.4 $6.6 $6.6 $7.8 $8.0$11.0

$15.9

$20.0$21.5

$40.0

$0$5

$10$15$20$25$30$35$40$45

Hur

rica

ne H

ugo

(198

9)

Win

dsto

rm L

otha

r (1

999)

Win

dsto

rm D

aria

(199

0)

Typh

oon

Mirei

lle (1

991)

Hur

rica

ne C

harley

(200

4)

Hur

rica

ne Iv

an (2

004)

Nor

thridg

e Ea

rthq

uake

(199

4)

Sept

. 11

Terror

Attac

k (2

001)

Hur

rica

ne A

ndre

w (1

992)

Hur

rica

ne K

atrina

(200

5)*

Hurricane risk is real.

• Coastal property

Hurricane risk is real.

• Global markets

Hurricane risk is real.

• Climate change?

Hurricane risk is real.

Hurricane risk is real.

Hurricane risk is real.

Northeast Hurricane Tracks

AIR

RMS

MIT

Hurricane risk is real.

• 80% operations exposed• 50% not prepared• 45% negative impact

Companies are unprepared for the worst.

source: FM Global Natural Disaster Business Risk Study - 2008

Hurricane risk is real.

• “Disaster Amnesia” • Risk Underestimation• Procrastination• Short-Term Focus• Solution Dismissal

www.fmglobal.com/disaster

Loss is preventable.

• Best Practices = $$$• Weak vs. Strong RM

– 20x greater loss– 29X greater risk from

hurricane loss– 7x more costly

www.fmglobal.com/study

Loss is preventable.

0

100

200

300

400

500

600

700

"Modeled" Wind Loss Projection

Actual FM Global Gross Wind Loss

650

220Gro

ss L

oss

(U

S$M

)

Windstorm Loss from 2004 HurricanesWindstorm Loss from 2004 Hurricanes

Benefit from risk improvement$430M

Model PredictedLoss

Actual Loss

985

505

0200400600800

1000

Gro

ss L

oss

in U

S$

Mill

ion

s

Hurricane Katrina (2005)

49% reduction attributable to risk

improvement

Loss is preventable.

84% reduction in average loss

Average Wind Loss / $100 TIV

Hurricane Katrina (2005)

2.30

0.370.00

0.50

1.00

1.50

2.00

2.50

3.00

Av

g L

os

s/$

10

0 V

alu

e

(ce

nts

)

UnimprovedLocations

Improved Locations

Loss is preventable.

Loss is preventable.

• September 5 – Frances

• September 26 – Jeanne

Loss is preventable.

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Secure roof deck & flashing - emphasize

edges and corners

1

Secure building envelope including doors and other

openings

2Take reasonable precautions in the hours immediately before loss

3

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Simple, cost-effective solutions.

Washed away?

Blown in?

Blown off?

Shut down?

Surviving the Next Hurricane

• Rhode Island is vulnerable, people will forget

• You can beat Mother Nature

• Cure disaster amnesia

Eliminate vulnerabilities now

Questions

Surviving the Next Hurricane

• Rhode Island is vulnerable, people will forget

• You can beat Mother Nature

• Cure disaster amnesia

Eliminate vulnerabilities now