How to manage the risk of natural disasters in companies?

Natural disasters such as earthquakes, floods, hurricanes, forest fires, landslides, and tsunamis expose an organization to external events, which must be managed in a timely manner to mitigate the impact on human resources, operations, and business continuity. 

Below you will learn how your organization can best manage and prepare for the risk of natural disasters, which, given the current climate crisis, are becoming more likely and more frequent.

Risk of natural disasters

According to the United Nations Office for Disaster Risk Reduction (UNDRR), disaster risk is the probability of loss of life, injury or damage to assets that may occur in a society or community in a specific period of time and is determined by hazard, exposure, vulnerability and response capacity. 

Knowing this, just as government agencies work to prevent and reduce the risk of disasters in communities, it is important that private sector organizations include this risk in their risk management to ensure the safety and lives of employees, protect tangible and intangible assets, achieve business continuity in the event of natural hazards such as earthquakes, floods, droughts, among others, as well as reduce the damage caused by them.

Disaster risk management

In general, disaster risk management is a process that has to do with identifying, evaluating, planning, mitigating, and monitoring actions that, on the one hand, serve to prepare and protect the organization, seeking to prevent the risk from materializing and on the other hand, in the event of a risk occurring, to manage the situation as well as possible and set in motion recovery after the disaster, which in many cases may involve reconstruction. 

Considering the above, for proper disaster risk management in your organization, it is important:

1. Identify the risks  

As in any risk management process, the first step is to identify the risks and threats associated with natural events that could materialize and impact the organization. Depending on the geographical area in which they are located, they may consider external situations such as earthquakes, floods, cyclones, hurricanes, landslides, forest fires, and droughts.

2. Evaluate the risks

After identifying the risks of natural disasters to which the organization is exposed, it is necessary to evaluate the probability of their occurrence and assess the impact that each could have on human resources, assets, and the environment in which the organization is located. This is key because it allows prioritizing some risks over others and thus establishing the most appropriate control and mitigation measures.

In the case of Mexico, for example, being located in the Ring of Fire, which is where most earthquakes occur in the world, the probability that companies are affected by an earthquake is very high, so it is crucial to take measures to be prepared every time one occurs.

3. Disaster risk management planning

Management planning means structuring and developing useful plans and strategies for preventing, preparing for, responding to, and recovering (being resilient) in the event of a disaster. These plans and strategies must be easy to execute and highly effective since the aim is to protect employees, tangible and intangible assets, and, ultimately, the organization's assets. 

4. Risk control

At this point, control measures should be established to reduce vulnerabilities and mitigate the risk of natural disasters, i.e., to strengthen the organization's capacity to respond effectively to natural disasters. 

Many control actions can be implemented, such as improving early warning systems, preventing infrastructure damage, and training employees on how to act in the event of an adverse natural event.

5. Monitor and review

As in the management of other types of risks, disaster risk must be monitored periodically. The plans and controls implemented to prepare for and face the risk in case of occurrence must be effective and serve to respond to them. If not, the necessary adjustments can be made in time. This follow-up is key to preventing measures from falling short or becoming obsolete when it is time to act in an emergency or natural disaster.

Measures to prepare for and cope with natural disasters

To better control the risk of natural disasters in organizations, it is important to know and implement specific prevention measures according to the type of event and after the event occurs. 

These are some actions you can consider implementing in your organization in the event of an earthquake, flood, cyclone, or hurricane.

Before a natural event

⦁  Acquire insurance to protect the property and furniture in case of any event. 

⦁  Know if the organization is located in a seismic zone or prone to natural events such as cyclones and hurricanes. 

⦁  Have a clear plan and an easy evacuation route; in addition, it is necessary to establish safe meeting points for all employees. It is essential that all personnel know very well the safety procedures to be followed; frequent training is a great ally. 

⦁  Make periodic records of the organization's activities and store them in another physical location: they are the backup in case of serious damage and loss. 

⦁  Conduct regular reviews of the physical infrastructure to detect possible faults and repair them in a timely manner, for example, cracks, fissures, humidity or holes in walls and floors. It is also important to perform preventive maintenance on the pipes and plumbing of the facilities. 

⦁  Install seismic sensors and monitor water systems. 

⦁  Periodically carry out drills for earthquakes or other natural events. It is essential that most of the personnel participate, since drills help to better prepare people and are very useful for correcting any errors that may occur.

After a natural event

 ⦁  Carefully review the organization's facilities; for example, after an earthquake, verify how the infrastructure was left, whether they are minor damages or, on the contrary, represent a danger to the safety of personnel. Based on this, prioritize recovery actions. 

⦁  Restore critical operations as soon as possible to reduce the impact on business continuity. 

⦁  Implement the business continuity and disaster recovery plan that was previously established. 

⦁  Communicate timely and clearly to the organization's staff and stakeholders about the situation experienced and the measures being taken to best respond to the emergency. 

⦁  Evaluate lessons learned. Once the situation has returned to normal and the organization is more stabilized, it is necessary to evaluate what the event or natural disaster left, what lessons have been learned, and what areas of improvement are for the future. All this information will be useful for updating and strengthening disaster preparedness, response, and recovery plans and strategies. 

Would you add another important measure before or after a natural disaster risk materializes in your organization? Please leave us your comments. 

Finally, keep in mind that through Pirani's ORM risk management system, your organization can manage the risk of natural disasters simply and efficiently. With this system, you will be able to identify and evaluate risks in their probability and impact, establish controls, perform periodic monitoring, and much more. 

Create your free account, or if you want to learn more about how we can help you manage this risk, schedule a meeting with one of our experts.