Feature Article

Return on hurricane loss prevention = US$1:US$105

Cost-effective hurricane loss prevention tips

Take it to the bank!

A recent FM Global study reveals that for every US$1 spent on hurricane protection, loss exposure cost decreased by an average of US$105.

"Businesses often wonder if they are getting a good return when they invest in preventing hurricane-related wind and flood damage," said Brion Callori, FM Global senior vice president, engineering and research manager. "This analysis has yielded a pretty convincing answer. And the 1-to-105 ratio doesn't even reflect the business repercussions of a major hurricane loss such as damage to reputation, market share and shareholder value."

To arrive at the ratio, FM Global tallied an estimate for over 10,000 wind- and flood-related investments and their associated reduction in property loss and business disruption exposure for 1,800 clients around the world from 2008 to 2017. These estimates were calculated based on actual losses that have occurred at tens of thousands of properties insured by FM Global.

Businesses in hurricane-prone areas can expect a one-two-punch of wind and water. Prepare now with the cost-effective prevention measures listed below.

Minimize effects of costly wind damage:

  • Prepare backup power generators
  • Inspect and secure rooftops
  • Brace doors
  • Cover windows
  • Secure or strap down vulnerable objects, including rooftop equipment and solar panels.

Prevent costly flood damage:

  • Elevate or seal off valuable equipment
  • Fasten storage tanks
  • Inspect fire protection equipment
  • Prepare to turn off utilities.
  • Procure flood protection products that meet rigorous certification testing standards to help reduce the need for sandbags.

Plan and reduce damage by 70%
It's all in the planning. Businesses exposed to flood risk that invest in developing and practicing a flood emergency response plan (FERP) save money, time and reputation. FM Global loss history indicates that facilities with well-organized flood emergency response plans have nearly 70 percent less damage, and resume operations sooner than those with no plan or an inadequate one.

Access FM Global's NatHaz Toolkit for additional information on preparing for hurricane, flood, and other natural hazards.

FM Global's NatHaz Toolkit

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