Impact_of_Storm_Systems_on_Business_Continuity

Impact of Storm Systems on

Business Continuity

October 2014

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October 2014

Commercial in Confidence

Table of Contents

Overview ......................................................................................................................................... 2

Meteorological Hazard Areas .......................................................................................................... 3

Northwest Pacific Basin ......................................................................................................................................... 3

Northeast Pacific Basin .......................................................................................................................................... 3

Atlantic Basin ......................................................................................................................................................... 3

North Indian Basin ................................................................................................................................................. 3

Southwest Indian Basin ......................................................................................................................................... 4

Southeast Indian/Australian Basin ........................................................................................................................ 4

Australian/Southwest Pacific Basin ....................................................................................................................... 4

Changes to Cyclonic Patterns ......................................................................................................... 5

Impact of Storm Systems ................................................................................................................ 5

Human Population and Key Infrastructure....................................................................................... 6

Storm Associated Travel Disruptions .............................................................................................. 7

Agricultural Losses and Disruption to Oil & Gas Operations .......................................................... 8

Conclusion ....................................................................................................................................... 9

Global Risk Monitor; Bermuda & Hawaii Alerts ............................................................................. 10

About Us ........................................................................................................................................ 11

Disclaimer ...................................................................................................................................... 12

Impact of Storm Systems on

Business Continuity

October 2014



2 Commercial in Confidence

Overview

Storm systems pose considerable threats to human life and infrastructure, as well as travel and business

continuity in various economic sectors, throughout the year. Recent changes to weather patterns, including

longer monsoon seasons, have increased the impact of storm systems on human population, key

infrastructure, travel, and business operations and underscore the need for greater loss-prevention efforts.

Many countries, however, have been unprepared to face the impact of most weather systems in recent

years. The lack of disaster preparedness and response mechanisms are usually attributed to inadequate

funding, whilst the threats associated with cyclones tend to be underestimated in some countries due to the

dominance of traditional security threats such as terrorism, armed conflicts and crime in the risk landscape.

In such cases, private companies are forced to devise their own strategy to address the threats from

weather-related natural disasters, whilst insurers are left to cover private property losses.

As such, it is imperative that organisations, especially those operating in high-risk areas, become more

knowledgeable on the evolving threats from meteorological phenomena and ensure that necessary

measures are in place to mitigate the effects of cyclones on their personnel, assets and business

continuity.

Image copyright: swa182/Shutterstock.com

October 2014




Meteorological Hazard Areas

Storm systems of various strengths are formed in different periods of the year in areas called “tropical

cyclone basins”. Historically, there are seven: Northwest Pacific basin, Northeast Pacific basin, Atlantic

basin, North Indian basin, Southwest Indian basin, Southeast Indian/Australian basin and

Australian/Southwest Pacific basin.

Northwest Pacific Basin Storm systems originating from the northwestern section of the Pacific Ocean are called tropical storms

(63kph to 117kph maximum sustained winds) or typhoons (≥117kph maximum sustained winds). These

weather systems can be formed throughout the year; however, the frequency increases between late in

July and October, whilst activity remains low from February to March. An average of 26 tropical storms and

17 typhoons are annually recorded, making the basin the most active in the World. These meteorological

phenomena have the potential to make direct landfall over Oceanian islands and countries such as Japan,

China and South Korea in Northeast Asia, and Philippines and Vietnam in Southeast Asia, as well as affect

other parts of the region.

Northeast Pacific Basin Storm systems in the northeastern part of the Pacific Ocean are referred to as storms (63kph to 117kph

maximum sustained winds) and hurricanes (≥117kph maximum sustained winds). These weather systems

are more common between mid-May and late in November. The basin is considered the second most

active, with an annual average of 17 storms and nine hurricanes. These weather systems typically affect

the western region of Mexico, although some have the potential to have an impact on southwest United

States (US) and northern part of Central America.

Atlantic Basin Storms (63kph to 117kph maximum sustained winds) and hurricanes (≥117kph maximum sustained winds)

are mostly formed in the Atlantic during the hurricane season that typically occurs between June and

November. An average of 12 storms and six hurricanes can affect the Caribbean Islands, Central America,

the Gulf Coast of Mexico and the East Coast of the US. In addition, these weather systems can have an

impact on Canada’s Maritime Provinces, Venezuela in South America and islands off Central America,

including Colombia’s Archipelago of San Andres, Providencia and Santa Catalina.

North Indian Basin Between April and May as well as October and November, cyclonic activity is high in the northern part of

the Indian Ocean. An average of five deep depressions (61kph to 69kph maximum sustained winds) and

two cyclonic storms (≥100kph maximum sustained winds) are formed every year in the basin. Countries

that can be affected include India, Bangladesh, Myanmar, Sri Lanka and Thailand. In addition, these

weather systems can bring intense rainfall and strong winds to the Arabian Peninsula and Somalia in

Africa.

October 2014




Southwest Indian Basin Weather systems are typically formed in the southwestern part of the Indian Ocean between mid-November

and mid-April. Annually, approximately nine tropical storms (70kph to 131kph maximum sustained winds)

and five cyclones (≥152 maximum sustained winds) are generated in the basin, threatening Indian Ocean

island nations, including Mauritius, and Africa’s eastern coast.

Southeast Indian/Australian Basin Cyclonic activity is high from November to April in the Southeast Indian/Australian basin. Approximately

eight storms, also referred to as tropical lows in Australia and New Zealand, (59kph to 69kph maximum

sustained winds) and four cyclones (≥70kph maximum sustained winds) are generated every year in the

region. These meteorological phenomena pose a threat to northeastern and eastern parts Australia, as well

as several parts of Indonesia.

Australian/Southwest Pacific Basin Most meteorological phenomena form in the South Pacific Ocean between November and April. Annually,

ten tropical lows (59kph to 69kph maximum sustained winds) and five cyclones (≥70kph maximum

sustained winds) are generated in the basin and have the potential to affect Polynesian island nations, the

northern and western parts of Australia, and New Zealand.

Cyclone Katrina; August 2005. Image Public Domain; credit National Oceanic and Atmospheric Administration

October 2014




Changes to Cyclonic Patterns

In recent years, tropical storms, cyclones and hurricanes in various basins have shown significant changes

to their usual patterns. In most cases, storm systems have increased in frequency and intensity.

In 2013, the Northwest Pacific and North Indian Pacific basins generated the strongest cyclones in their

respective regions, whilst one of the most destructive cyclones in history hit Australia’s Queensland State in

April 2014. According to the US Joint Typhoon Warning Centre (JTWC), the number of storms and

typhoons in the Northwest Pacific basin has registered consecutive annual increases in the past four years

(19 in 2010, 27 in 2011, 27 in 2012 and 33 in 2013).

In addition, the trajectory of storms and typhoons has become more erratic. This means that more storm

systems are now affecting areas that used to be away from their traditional paths. For example, a number

of powerful storms and typhoons have made a direct landfall over southern Philippines and Vietnam in the

past three years, despite these areas being historically shielded from such storm systems. Weather

systems in the southwest Indian basin have also begun crossing into the Mozambique Channel since early

2000s.

Changes to storm system patterns are generally attributed to greenhouse gases. According to the Chinese

Academy of Sciences, increased greenhouse gas emissions have raised the Pacific Ocean’s temperature,

and as a consequence there have been longer typhoon seasons in the region and stronger cyclones. In

addition, the United Nations (UN) has warned that cyclones in the coming years are expected to intensify

and become more destructive.

Impact of Storm Systems

In recent years, storm systems have caused wide-ranging impacts on population centres and various

economic sectors. The effects differ depending on several factors, including a) strength and size of the

weather system, b) whether or not the cyclone made direct landfall, and c) existing government measures

against natural disasters.

It is also worth reiterating that changes to storm system patterns, such as trajectory, frequency and

intensity, have significantly increased the impact of meteorological phenomena in the past decades.

See the following pages for impacts to:

Human Population and Key Infrastructure

Storm Associated Travel Disruptions

Agricultural Losses and Disruption to Oil & Gas Operations

October 2014




Human Population and Key Infrastructure

Storm systems pose considerable risks to the safety of human population centres due to their capacity to

unleash sustained torrential rainfall and strong winds. The common threats resulting from cyclones are

flash floods in low-lying communities and along rivers, tributaries and creeks, as well as landslides that can

cascade and sweep through neighbourhoods along a mountain slope or at its foot. Cyclones can also

trigger life-threatening storm surges along coastal communities and unleash powerful tornadoes in plains or

flat regions.

These storm associated hazards can result in high numbers of casualties, especially if the area does not

have adequate safety measures such as early warning systems, organised evacuation capabilities, safe

and secure temporary shelters and well-maintained flood dykes. Significant damage to private property and

key infrastructure, including electricity, telecommunications, road and public transport, and government,

can also occur. In the event of major infrastructural damage to road networks and transportations hubs,

affected communities can be isolated for an indefinite period, elevating the risks to public health and safety.

Furthermore, civil disturbances and crime such as looting can break out in the aftermath of a powerful

storm system due to the presence of opportunistic criminals, social panic and high competition for limited

supplies of basic commodities. In some cases, the military is deployed to restore order in the affected

area(s).

In November 2013, Typhoon Haiyan, one of the strongest cyclones recorded in history, hit several

countries in Asia. The Philippines was the worst-hit amongst all affected countries. According to the

National Disaster Risk Reduction & Management Council (NDRRMC), the typhoon left at least 6,300

people dead and injured more than 28,680 others. Nearly 3.5 million families or 16 million individuals from

591 municipalities and 57 cities were affected, whilst more than four million people were moved to

evacuation centres.

In addition, approximately 551,000 residences were destroyed and 589,400 were damaged. Overall,

Haiyan left damages to infrastructure, including roads and bridges, health facilities and schools, amounting

to more than USD436 million (PhP19.5 billion). Furthermore, several episodes of looting were reported in

Tacloban City, in the aftermath of the typhoon, with crowds targeting department and grocery stores.

Image copyright:

Sergey Nivens/

Shutterstock

October 2014




Storm Associated Travel Disruptions

Storm systems can affect transport and travel industries to varying degrees. Sustained, intense rainfall can

reduce visibility and flood runways, roads and rail networks. Strong winds, on the other hand, can impair

the ability for aircraft to take off, fly or land and damage transportation hubs. Storm systems can also

generate high waves deemed dangerous for maritime travel. In addition, subsequent power outages could

reduce or shut down operations at rail stations, ports and airports.

The effects of storm systems on transport and travel industries vary depending on the strength, size and

movement of the cyclone. Generally, the stronger, the bigger and the slower the cyclone is, the higher the

impact should be anticipated.

For air travel, passenger and cargo planes can either be delayed or cancelled. In addition, aircraft can be

diverted to another airport. These disruptions can cost operators and leave passengers stranded for

several days. According to Delta Airlines, the company’s profit for October 2012 was reduced by

approximately USD20 million after Hurricane Sandy; considered as the most destructive storm during the

2012 Atlantic hurricane season and resulted in the cancellation of nearly 20,000 incoming and outbound

flights in the US. Reports also indicated that at least 1.5 million passengers were affected.

For maritime travel, passenger and cargo vessels can be affected by a cyclone. Heavy downpours and

strong winds, coupled with high waves, can lead to reduced or suspended maritime travel, as well as

closure of ports. As a result, passengers can be stranded, whilst cargo shipment can be halted. In some

cases, casualties can occur when vessels are severely damaged or capsize. In addition, port disruptions

can prompt cruise ships to cancel a port call or change its route. Furthermore, supply-chain logistics can be

disrupted when ports are ordered to close due to inclement weather. Port closures can paralyse the

movement of cargo vessels, halt loading and unloading of goods, as well as disrupt deliveries.

In August 2013, the Mindanao Banana Farmers and Exporters Associations (MBFEA) reported losses

amounting to approximately USD22 million (PhP1 billion) due to disruption to shipments for several months,

following the impact of Typhoon Bopha in December 2012, the strongest to hit southern Philippines.

Several passengers, on the other hand, were wounded after MV Cap Finistère belonging to Brittany Ferries

was caught in a powerful storm on its way from Portsmouth in the United Kingdom (UK) to Bilbao in Spain

early in 2014.

Similarly, cyclones can lead to railway service disruptions and affect passenger and/or freight trains. Rain-

triggered floods can wash away and damage rail tracks, whilst strong winds can cause power failures at

stations. In addition, landslides can damage the railway network and even pose considerable hazards to

trains.

Sections of Wellington Railway Station, the busiest in New Zealand, were closed for nearly a week after

one of the strongest storms to hit the country in 2013 damaged the railway tracks in June. According to the

Ministry of Transport, the economic impact of the railway disruption was between USD9.5 million (NZD12)

USD34 million (NZD43 million). The breakdown included NZD5.3 million in cost to local and central

government agencies, NZD5.3 million loss in value of travel time and between NZD2 million and NZD23

million reduction in output.

October 2014




Agricultural Losses and Disruption to Oil & Gas Operations

Storm systems have the capacity to disrupt operations in the oil & gas industry. Companies are known to

evacuate platforms that are within a cyclone’s path, and plans to transfer personnel to a safer location

become more complex the farther the site is from the shore. In addition, operations can be suspended due

to the impact on oil & gas infrastructure, including rigs, platforms, processing plans and pipelines. Heavy

downpours and strong winds generated by cyclones can cause damage or even result in complete

destruction of the site.

In general, 2,570 offshore natural gas rigs and oil platforms in the Gulf of Mexico, as well as natural gas

processing plants and pipelines located in the same area, are considered to be vulnerable to the impact of

cyclones coming from the Atlantic basin. Whilst the 2013 Atlantic hurricane season only shut in 3.1 million

barrels of oil and 6.7 billion cubic feet of natural gas, the US Energy Information Administration (EIA) stated

that storms and hurricanes can halt the production of 11.6 million barrels of oil and 29.7 billion cubic feet of

natural gas per year in the Gulf of Mexico.

Similarly, storm systems can significantly impact the agriculture industry. Rain-triggered floods and strong

winds can sweep through farmlands and destroy crops. In addition, poultry, livestock and aquaculture

farms, as well as warehouses, can be damaged or destroyed. It should be noted that the adverse effects of

cyclones on agriculture also pose a considerable threat to the livelihood of local farmers, local economy

and food stability. In some extreme cases, severe cyclones can destroy the produce of an entire

agricultural cycle.

The American Farm Bureau Federation estimated that damages to farm-related industries due to Hurricane

Katrina in 2005 was approximately USD2 billion. According to reports, the hurricane flattened and

inundated crops, including sugar cane, soybeans and cotton, as well as destroyed chicken farms, in

Mississippi, Louisiana and Alabama. In addition, the hurricane disrupted the flow of agricultural trade in the

southern US. The Louisiana State University Agricultural Centre also reported that Hurricane Katrina

caused substantive damage to vegetation, aquaculture and fisheries to various southern states, notably

Louisiana.

According to a report prepared by India’s Meteorological Department on the impact of Cyclone Phailin that

hit eastern India in October 2013, 668,268 hectares of crop area were affected in the state of Odisha and

6,192 hectares of paddy crop were inundated in Andhra Pradesh. State-run Food Corporation of India (FCI)

and Central Warehousing Corporation also indicated that approximately 47,000 tonnes (52,000 tons) of

stored grains were destroyed in Odisha.

October 2014




Conclusion

Storm systems produced in recent years have claimed tens of thousands of lives in a single country,

affected millions of passengers in a span of a week and resulted in damages and economic losses

amounting to billions of dollars. Due to increasing global warming and other factors, the impact of these

cyclones is also expected to further intensify as stronger storms and typhoons/hurricanes are forecast to be

formed across the globe, notably in the Atlantic and North Indian basins, in the coming decades. In

addition, changes to cyclonic patterns will likely lead to more areas being affected and more weather

systems formed throughout the year.

The more frequent and stronger cyclones will require more responsive and effective disaster preparedness

mechanisms to mitigate the evolving impact of weather systems. These should include measures that are

continuously reviewed and address local specific conditions. In addition, coordinating with the national

meteorological agency and other institutions will allow a more holistic approach to addressing the threats

from cyclones.

NASA's Aqua satellite passed over Typhoon Vongfong on Oct. 11 at 04:15 UTC (12:15 a.m. EDT) as it was

approaching Japan's big islands, image as below:

Image Public Domain; credit NASA Goddard MODIS

Rapid Response Team

October 2014




Global Risk Monitor; Bermuda & Hawaii Alerts

UPDATE 1: Weather Warning Maintained as Hurricane Gonzalo Approaches Bermuda Bermuda / 16 October 2014 Alert Severity Rating: 3 (Moderate)

The Bermuda Weather Service (BWS) announced on Thursday, 16 October, that an earlier-issued hurricane warning remains in effect as Hurricane Gonzalo continues to pose a threat to the island. According to the BWS, weather conditions will begin to deteriorate by Thursday evening and that winds of up to 119kph (74mph) are forecast at least through the weekend. Reports indicated that the island's L.F. Wade International Airport (BDA) is set to close on Thursday evening and that operations at the facility are likely to be suspended until at least Saturday, 18 October. A number of airlines have reportedly scheduled additional flights on Thursday to fly tourists off the island ahead of the storm's arrival. Bermuda's government offices and schools will also be closed on Friday as Gonzalo makes its closest approach to the island; several private schools and other establishments, however, have announced that they will be closed by Thursday. Gonzalo's impact is believed to further exacerbate the effects of Tropical Storm Fay, which struck the island last weekend, causing widespread power supply disruptions, road closures, as well as infrastructural damages. As of early Thursday morning, Gonzalo's centre was sighted at approximately 937km (582mi) south southwest of Bermuda with maximum sustained winds of 194kph (121mph). Gonzalo, considered to be the strongest of the 2014 Atlantic hurricane season, is forecast to come close to directly hitting Bermuda on Friday, 17 October, before it tracks north and potentially affect parts of Canada's easterly province of Newfoundland and Labrador over the weekend. Those in Bermuda are advised to stay abreast of the latest weather updates, anticipate possible service and travel disruptions in the coming days. They are also advised to prepare emergency kits and remain in a secure location and heed further instructions from the authorities.

Tropical Storm Ana Predicted to Make Landfall in Hawaii on 19 October

United States / 14 October 2014 Alert Severity Rating: 3 (Moderate)

On Tuesday, 14 October, the National Weather Service indicated the strong possibility of Tropical Storm Ana further strengthening in the Pacific Basin before making a direct landfall on the Big Island of Hawaii. Ana, currently located 1,440km (895 miles) southeast of the Hawaiian city of Hilo, has maximum sustained winds of 80km/h (50mph), but is expected to gain hurricane status as a Category 1 storm with 137km/h (85mph) winds by Saturday, 18 October. Predicted landfall would be on Sunday, 19 October, with a direct hit on the Big Island and collateral damage for surrounding islands. While there can be no absolute certainty as to Ana's impact on the state of Hawaii, models have the most likely path as headed directly towards the Big Island. The storm would be only the third hurricane to make landfall on Hawaii, and the first ever to do so on the Big Island. Tropical Storm Iselle, however, did have a direct hit on the Big Island during August of this year, also a rarity; thousands were left without power in the aftermath of the storm, although the state has since fully recovered. Clients travelling in Hawaii are advised to pay careful attention to weather forecasts during the remainder of the week; should Ana make landfall as either a hurricane or tropical storm, all business and travel plans should absolutely be postponed due to the immediate threat posed by winds and flooding. Supplies such as bottled water, batteries and other items necessary during a power outage should also be kept well stocked in the event of landfall. Finally, clients should remain indoors throughout the duration of such a storm, especially considering the dual threats of landslides and fallen debris on the Big Island.




October 2014

About Us

Drum Cussac is a global business risk consultancy advising corporations, organisations and institutions in

emerging and complex markets. We provide bespoke, flexible and cost-effective solutions to protect

people, business assets, reputation and profitability.

Our Information Services team deliver 24/7 analysis services from Drum Cussac hubs in Europe, the

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Drum Cussac's Global Risk Monitor (GRM) provides online Country Risk Reports with global situation

alerts, such as those shown on the previous page that have the potential to impact on business continuity.

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the latest risks to their business.

For a free trial of our GRM service, including weather hazards that might impact on business continuity,

please see www.drum-cussac.info or contact Hamza Sahi on +44 1202 802 060.

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