Natural disasters

Clusterstock  Oct 14  Comment 
Natural disasters are having increasingly focused impacts on countries and communities, and these will need to prepare better for the future, according to an OECD report. This chart, from the report, shows that the overall number of disasters...  Oct 7  Comment 
Even though the largest Ebola outbreak in history has been dominating headlines, few Americans are opening their wallets to help.
New York Times  Oct 4  Comment 
Michael Pelonero brings personal experience to his job of conducting home inventories after natural disasters. He lost his own home in Hurricane Ike in 2008.
Clusterstock  Sep 23  Comment 
This weekend, Raymond James strategist Jeff Saut appeared on Barry Ritholtz's Masters in Business program on Bloomberg Radio. There was a lot of knowledge dropped. Saut said he believes we're currently in a cyclical bull market that could be...
BusinessWeek  Sep 22  Comment 
Tallying the public health toll of climate change finds risks in extreme heat, greater pollution, natural disasters, hunger, and infectious disease
Insurance Journal  Sep 18  Comment 
Swiss Re Ltd., the world’s No. 2 reinsurer, is cutting back on catastrophe coverage and moving into new lines of business as low interest rates and fewer natural disasters undercut prices. “The super profits from nat cat are probably over...
Commodity Online  Sep 18  Comment 
India loses about one per cent of its gross domestic product (GDP) in natural disasters.The business and corporate sector should go in for clean forms of energy which has major benefits of mitigating emissions of greenhouse gases.  Sep 5  Comment 
BOSTON (TheStreet) — San Francisco has earthquakes, Oklahoma City has tornadoes and New Orleans has hurricanes — but here's a look at five major U.S. communities that have the highest combined risk for all three. "Most places tend to have...
Insurance Journal  Sep 4  Comment 
Georgia is among 21 states failing to protect kids during natural disasters, particularly those who spend their days at child care centers throughout the state, according to a new report from a child aid organization released Tuesday. The report,...
Forbes  Aug 31  Comment 
Project Loon's goal is to deliver Internet access to people in rural and remote areas, fill in coverage gaps and bring people back online after natural disasters via a network of balloons.


A natural disaster is the consequence of a natural hazard (e.g. hurricane, volcanic eruption, earthquake, landslide) which moves from potential in to an active phase, and as a result affects human activities[1]. Business is one such activity.

The International Red Cross, which publishes an annual World Disasters Report, says the economic cost of natural disasters has skyrocketed. In the past two decades alone, direct economic losses from natural disasters multiplied five fold to US$629 billion. Annual direct losses from weather-related events increased from an estimated $3.9 billion in the 1950s to $63 billion in the 1990s[2].

Natural disasters tend to affect insurance companies as well as local businesses affected by the disaster. The impact on other businesses can vary. For example, disruption in the oil drilling and refining activities in the Gulf of Mexico during the 2005 hurricane season caused some companies to lose revenue due to the loss of productive capacity, but also caused the price of oil to increase thus benefiting others in the industry. Landstar System, which has a contract to provide trucking services to the U.S. Government in the aftermath of natural disasters, was also a beneficiary[3].

Some studies have suggested that commodities provide an effective hedge against natural disasters because disasters such as floods, drought and hurricanes can affect commodity supply (see oil example above) and increase the price. However, the effect can differ across commodities - a drought could cause a shortage of corn and increase corn prices. The higher corn prices raises feed prices, which could cause ranchers to slaughter cattle earlier than usual and depress the price of that commodity in the short term.

Companies with negative exposure

Many companies are adversely impacted by the threat or actuality of natural disasters. Some include:

  • Property & Casualty insurance companies
  • Homebuilders and REITs with exposure to earthquake or hurricane prone regions
  • Travel and vacation companies, including cruise lines like Carnival (CCL) and Royal Caribbean Cruises (RCL) who operate in the Caribbean, where hurricanes are most common.
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