Natural disasters

Reuters  4 hrs ago  Comment 
Japan's services sector grew at its slowest pace in two years in September due to heavy rains, flooding, and earthquakes, a private survey showed on Wednesday.
Motley Fool  Sep 21  Comment 
Natural disasters can affect your stocks in ways you might not have thought of.
New York Times  Sep 19  Comment 
We’re making natural disasters unnaturally harmful, scientists say. And the number of ways we’re doing it is fairly astonishing.
Yahoo  Sep 17  Comment 
Sep.17 -- Norbert Nusterer, vice president at Cummins and President at Cummins Power Systems, discusses power demand and availability in the aftermath of Hurricane Florence and the impact of natural disasters on the company’s business. He speaks...
Financial Times  Sep 13  Comment 
They manage natural disasters on a yearly cycle.
Yahoo  Sep 13  Comment 
If you hear somebody say natural disasters boost the economy, don't believe it.
New York Times  Sep 7  Comment 
Governments around the world should assign special resources to protect their national museums from the risk of fire and natural disasters.
Insurance Journal  Aug 16  Comment 
Australia’s QBE Insurance Group Ltd. posted a better-than-expected 4 percent rise in first-half profit, helped by fewer natural disasters in its biggest markets, sending its shares up almost 9 percent to their highest since November. The strong...
New York Times  Aug 16  Comment 
Over three decades, the photographer has covered major events, natural disasters and the struggle against governmental abuses. Now he is in jail in Bangladesh.
Insurance Journal  Aug 1  Comment 
After global insured natural catastrophe losses hit record highs in 2017, will reinsurers be able to withstand another year of active natural catastrophes? S&P Global Ratings indicates that while reinsurers are entering this year’s hurricane...


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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