Hurricane Katrina: $125.0 billion. Hurricane Sandy: $68.0. Hurricane Ike: $37.5. Hurricane Wilma: $29.2. Hurricane Andrew: $26.5.
As hurricanes, these were among the costliest in history, due to the storms generating heavy winds and rain. However, these are not the only natural disasters that have impacted businesses. Damage to Businesss assets include facilities, infrastructure, data and personnel.
The following natural disasters are the top five for economic losses in the past two decades:
- 2011 – A tsunami in northern Japan caused a major nuclear power plant failure. Businesses and data centers experienced significant damage due to their proximity to the disaster area. This event caused $45.4 billion in economic losses.
- 1995 – The Kobe, Japan earthquake caused $100 billion in economic damage and killed 6,500 people. Many businesses in proximity to Kobe were destroyed.
- 2005 – Hurricane Katrina was directly responsible for 40 percent of businesses failing to recover.
- 1994 – The Northridge, California earthquake measured 6.7 on the Richter Scale and struck the Los Angeles and San Fernando Valley areas. While the quake zone was small due to the size of the epicenter, it lasted 20 seconds. The earthquake caused massive damage to facilities, infrastructure, power and water supplies.
- 2008 – The Szechuan, China earthquake measured 8.0 on the Richter Scale, killed 70,000 people, and caused $29.0 in economic damage.
Other natural disasters that have required Disaster Recovery Plans are tornados, fires, droughts, flooding and winter weather.
The cost of natural disasters and the impact on data centers is skyrocketing. According to the American Red Cross, the frequency and cost of natural disasters in general is likely to increase exponentially. It is disturbing, that 6 in 10 of American Businesses do not have a formal Disaster Recovery Plan, Off-Site Data Backup or Emergency Response Plan. In the past 3 years, another 30 percent of Business were closed for 24 hours because of a natural disaster.
Countries that have a high accumulation of Business with data centers and technology tend to have restrictive cost and suffer higher economic losses.
With world-wide Businesses 60 percent have mechanisms in place like Early Warning Systems, Evacuation and Disaster Recovery Plans. The other 40 percent do not have a Disaster Recovery Plan in place. These Business are dependent on insurance for medical and property damage, but not for data loss.
With more than $2.4 trillion in insurance and economic losses for natural disasters in the last decade, it is wise to always be prepared.
Image compliments of Emergency Management Degree
About the Author
Dynamic change agent with 25+ year portfolio of success developing IT strategies, functional areas, groups, organizations, infrastructures, and programs to enable successful business growth. Instrumental in facilitating expansion of home improvement retailer Lowe’s from 1K to 2K stores by building and deploying new, world-class IT organization from the ground up. Adept at leading and mentoring teams of up to 150+ across multiple geographical areas. Analytical thinker, adept at identifying and distilling long-standing issues, defining solutions, and driving implementations and roll-outs. Skilled in serving as a Subject Matter Expert on IT processes, methods, and organizations. Dedicated to cultivating high-performance teams.