Natural disasters

RECENT NEWS
Automotive World  Nov 29  Comment 
Earthquakes and tsunamis, and the damage they bring, come with doing business in Japan. For any company with operations there, effective business continuity planning is crucial. By Megan Lampinen The post Natural disasters can’t be avoided,...
NPR  Nov 14  Comment 
When damage from floods and earthquakes is tallied, the emphasis is on lost property and possessions. The poor face another, even more devastating kind of loss.
guardian.co.uk  Nov 14  Comment 
Study finds floods, storms and droughts cost global economy $520bn a year and highlights need to tackle climate change Floods, earthquakes, tsunamis and other extreme natural disasters push 26 million people into poverty each year and cost the...
New York Times  Oct 10  Comment 
A new interactive app illustrates the connection between the natural disasters and Earth’s hot interior.
Forbes  Oct 7  Comment 
Most of us have an innate curiosity for natural disasters as long as we’re not caught in their crosshairs. They’re even more addictive these days because we can watch them unfold on television and online in real time.
Benzinga  Sep 25  Comment 
While it's unpleasant to think about it, disasters happen. Things get stolen. Natural disasters leave homes unlivable and possessions beyond repair. That's why home and property insurance exist — to rebuild after things beyond our control leave...
New York Times  Sep 1  Comment 
Mobile alerts and free tools can notify you and help you prepare for emergencies including extreme weather, natural disasters and other crisis situations.
MarketWatch  Aug 26  Comment 
The shelters are designed to protect against everything from natural disasters to home invasions and ISIS attacks.
MarketWatch  Aug 25  Comment 
Sales volume and price appreciation have been greater in lower-risk areas, according to one real estate data provider.
Clusterstock  Aug 25  Comment 
Most people would rather not buy homes in a known dangerous area, especially when the risks can't be removed. Attom Data Solutions looked into how exposed over 3,000 US counties are to six natural hazards: earthquakes, floods, hurricane storm...




 
TOP CONTRIBUTORS

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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