Catastrophic events – both natural and man-made – occur in many forms and may severely affect a company’s ability to conduct its normal business. And given today’s global business environment, a local catastrophic event can have far-reaching consequences. As such, companies need to be prepared to respond to any event with an integrated catastrophe response plan that recognizes the various types of impacts on their organization and have appropriate resources at hand to help them to manage their response and recovery.

Catastrophes demanding this type of response can be defined as events that cause significant impact to property, life and/or business operations, and result in significant financial impact to a company or geographic region. While this may include events ranging from industrial accidents to terrorist attacks to massive product recalls, next month’s 10th anniversary of Hurricane Katrina serves as a stark reminder of the destruction and business continuity issues that can arise from a large natural catastrophe.

Although researchers at Colorado State University have predicted a below-average number of storms for the 2015 hurricane season, which runs from June 1 through November 30, it only takes one land-falling storm to cause significant damage. Keep in mind, forecasters in 1992 predicted a below-average Atlantic hurricane season, yet Hurricane Andrew was the costliest natural disaster in terms of insurance claims payouts in U.S. history when it hit Florida and Louisiana that year.

Companies with well-developed actionable response plans in place prior to a catastrophic storm are in a much better position to help protect their employees, facilities and the affected community, especially if their property is needed for shelter. Such plans can also help properly address operational issues that can be critical when filing insurance claims.  

While the hurricane season is in full swing, it is not too late to develop or update a catastrophe response plan. In doing so, the following 10 steps should be kept in mind:

 Before a Loss

  1. Identify your catastrophe-exposed locations.
  2. Assess your supply chain for catastrophe exposures that could generate contingent time element losses.
  3. Run catastrophe models for your identified exposures.
  4. Assess the values exposed within your portfolio to loss from hurricane or storm surge perils and analyze modeled loss estimates for physical damage as well as direct and contingent time-element losses to determine where mitigation efforts can best be directed.
  5. Assess the adequacy of your insurance in terms of limits, retentions and coverage terms and conditions.
  6. Develop or re-evaluate your catastrophe response team, claims management and crisis response procedures to ensure they properly address your exposures and security requirements.
  7. Review these plans in conjunction with your organization’s operational and financial goals.

After a Loss

  1. Activate your catastrophe response, claims management and/or crisis response plans. Actions should include securing the property from any further losses.
  2. Monitor the progress and adjust activities as needed; establish communication protocols to ensure your organization’s recovery is proceeding in support of the stated goals.
  3. Conduct a post-event evaluation and improve plan where necessary.

The steps above are applicable not only to hurricanes but form a part of, a comprehensive risk management plan,which allows a firm to respond to any number of events whether natural or man-made.

Today’s dynamic and complex business environment requires an approach to catastrophe management that uses “risk management situational awareness” – a continuous assessment of anything that can pose a risk to a company’s people, assets, operations, supply chain and financial well-being.  This includes identifying risks inside and outside the organization as well as those that might lie within a supply chain.

In identifying and monitoring these risks, it is important to ensure that their impact is properly measured and addressed through various mitigation and risk transfer techniques that support the operational and financial goals of the organization. As specific risks are identified, separate modules within the overall response plan can be created. However, the plan should be robust and flexible to be able to respond to unexpected events.  

It is impossible to look at the news on any given day without constant reminders of the risks we face from natural disasters to man-made events like cyber, civil unrest, and terrorism. With continuous assessment of potential risks and a regularly updated comprehensive catastrophe response plan, security officers can rest easier knowing they are prepared to respond if and when a catastrophe hits.


This information is not intended to be taken as advice regarding any individual situation or as legal, tax or accounting advice and should not be relied upon as such.  You should contact your legal and other advisors regarding specific risk issues.  The information contained in this publication is based on sources we believe reliable but we make no representation or warranty as to its accuracy. All insurance coverage is subject to the terms, conditions and exclusions of the applicable individual policies. Marsh cannot provide any assurance that insurance can be obtained for any particular client or for any particular risk. Marsh makes no representations or warranties, expressed or implied, concerning the application of policy wordings or of the financial condition or solvency of insurers or reinsurers.