The hazard posed by potential flooding is increasingly on the minds of many business owners, said Lou Gritzo, vice president and manager of research at Johnston, R.I.-based business property insurer FM Global. Gritzo recently spoke with Insurance Journal to discuss what steps business owners can take to help mitigate potential flood damages.
Gritzo said FM Global’s philosophy is that the majority of loss is preventable. “We develop engineering solutions; we work with our clients to implement those solutions to reduce their risk; and then we insure the risk that they can’t reduce,” he said.
The first step that businesses can take — if they haven’t done already — is to clearly understand what kinds of flood hazard they’re exposed to. These hazard exposures are oftentimes communicated as a 100- or a 500-year level on flood maps, but that’s not the best way to think about it, Gritzo suggested. “A 100-year flood actually has a 1-in-100 chance of happening every year,” he said.
Gritzo said business owners should understand what floods their facilities could face, understand their risks, and then study measures that can protect their businesses from that water.
‘500-Year Water Level’
“We advise clients to protect to the 0.2 percent, or what’s commonly referred to as the 500-year water level,” Gritzo said.
“A simple thing that oftentimes clients can do — and now’s the time to do it — is to move their valuable assets,” he said. Whether it’s a data center or sophisticated equipment, such assets should be moved to areas above those water levels, so that valuable equipment are out of potential harm’s way, he recommended.
Afterwards, the next step is devising a way to block the water and keep it away from the facilities. Gritzo noted that because of the recent floods, there have been many new flood barriers and flood blocking devices — innovative solutions to keep water away from structures — that have come onto the market in the last few years.
Gritzo said FM Global has recently tested and certified over two dozen different kinds of flood barriers in association with the National Association of State Floodplain Managers and the Army Corps of Engineers. “Sandbags are the thing of last resort. They’re heavy. They’re hard to move. They’re difficult to fill,” he said. “There are lots of other solutions.”
“Businesses should first assess the hazard, know what water levels businesses need to protect against,” he advised, “then move the equipment or any sensitive materials out of harm’s way, and take measures to keep water away from their structure so that it’s high and dry when the water levels go down.”
Gritzo suggested these activities should start right away if they haven’t started already. With melting snow and spring rains, there will be full reservoirs throughout the U.S. eastern region in coming months. “We’re going to see rivers overflowing their banks,” he said. “Now’s the time for businesses to make those investments and take those actions to protect their facilities from the damage of flood.”
He also advised that business owners should have a flood emergency-response plan, “a play book” for what they will do when the water rises, how they will put up their flood barriers, how they will keep the water out of their buildings, and how they will maintain their business continuity when the water levels start to rise.
Gritzo also spoke on the topic of climate change and its potential impact. “Well, the climate is changing, it’s going to continue to change, and sometimes that can present some uncertainty in terms of what measures are necessary,” he observed.
Gritzo said one of the areas where the science is most clear is that sea levels are rising. He said the cumulative level of sea rise would put coastal properties at greater risk.
“When storms come in, and when you add the wind from storms, in addition to high tides, we’re going to see the same kind of phenomena we saw in the Sandy storm, where that water’s going to pile up and flood coastal areas,” Gritzo said. “That’s something to keep in mind in the long term. Coastal areas need to take extra measures now and start to think about how they’re going to protect their property.”
Gritzo said another climate factor is that there’s a good indication the severe thunderstorms are becoming more frequent and more intense. “That effect, combined with the current status of flood hazards in the eastern region, really should be a wake-up call for property owners to think about how they’re going to keep water out of their building,” he said.
And one last factor associated with climate change is not what Mother Nature is doing, but “something that we’re all doing.”
“We continue to urbanize areas that are affected by flood — so we’re putting more assets at risk — and we continue to change the way that flood waters are routed by developing areas that were previously undeveloped,” Gritzo noted. Water that would normally sink into the soil would need somewhere else to go when the area gets paved as a parking lot, for example.
There are cumulative effects of urbanization that are constantly changing the flood hazard profile in developing regions. “There’s a lot of good evidence that shows that that’s a key factor,” he said, “so this is part of assessing the hazard that’s necessary for property owners to do.”
These long-term effects should serve as additional motivators for businesses to take action, Gritzo said. He advised that by protecting to the 0.2 percent, or the 500-year water level, businesses can be in good shape to deal with those challenges in the near term.
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