loss control forum 2016 chuck nyce, phd florida state...

Chuck Nyce, PhD Florida State University cnyce@fsu.edu

Loss Control Forum 2016

Presentation Overview

- What I know - Natural Hazards, Natural Disasters, Man Made Disasters,

Climate Change - What I think I know

-  Life safety takes precedence over economic losses -  Urbanization, demographic transition, population migration

- Expanding supply chains/interconnectivity imply increasing frequency/severity of disaster losses

- What I wish I knew -  Impact of economic nationalism, balance between efficiency and

risk control (supply chain and cyber), economic value of disaster exposure

What I know – Natural Disasters

- Natural Events (Hazards) are almost impossible to predict

- Natural Disasters: - Are the interaction between natural conditions (earth movement,

weather, etc…) and human evolution -  Involve some combination of the loss of life, property and

economic consequences - Are not well defined - Are changing through time and with climate change (excluding

earth movement, weather related events are changing) - Sea level rise is a given, not good news for some coastal

communities (think Miami and Manhattan)

Natural Disasters

- Deadliest Natural Disasters - China 1931 Floods: 1-4 million - Bangledesh 1970: 400,000 -  Indian Ocean Earthquake/Tsunami 2004: 280,000 - Haiti Earthquake 2010: 230,000 (2.3% of population)

Natural Disasters

- Costliest Natural Disasters (insured losses, economic losses, property losses?) -  2011 Japanese Earthquake/Tsunami ($35B/$200B) -  2005 Katrina ($35B/$100+B) -  2008 Kobi Earthquake -  1992 Hurricane Andrew

- Note correlation (or lack there of)

Recent Natural Disasters

- What is recent? -  Human vs. geological timeframes -  Superstorm Sandy

-  $26 Billion in Insured Losses? -  Earthquake/Tsunami

-  Japan 2011 -  16K+ killed, 330K buildings destroyed, nuclear meltdown -  Ocean water 6 miles inland -  Insured losses $35B, Economic losses $200B

-  Earthquake Haiti -  230K killed of 10M, 2.3% of population killed

-  1918 Flu -  8M dead in WWI -  3% of world’s population died (50M)

Changing Natural Hazard Risk

0

500

1000

1500

2000

2500

3000

3500

1900

19

09

1909

19

15

1916

19

18

1921

19

26

1929

19

33

1933

19

35

1938

19

42

1944

19

47

1949

19

50

1954

19

55

1957

19

60

1964

19

67

1970

19

75

1980

19

84

1985

19

92

1995

19

99

2004

20

05

2005

# of Days Between Cat 3 Storms

Changing Natural Hazard Risk

Population Movement (phys.org)

Changing Windstorm Exposure

Historical Hurricane Tracks Tool, NOAA Coastal Services Center

Wildfire Risk Map

Earthquake Risk Map - US

What I know – Man Made Events

§ They are harder to predict than Natural Events/Disasters

§ That is ALL I KNOW!

What I think I know

§ Economic Effects of Disasters (both Natural and Man Made) will continue to grow: - Population migration - Urbanization in developing world - Demographic transition in developing world - Expansion of the supply chain (distance, just in time delivery)

- Interconnectivity/technology

Cargo – truly global Apple suppliers

MOL Comfort – going,going,gone !

Total claim c. $300m - $400m

Where is this ?

July to Dec 2011

Tianjin Port – Aug 2015

What I Wish I Knew

- What is the right balance? - Efficient day to day operations vs. post-loss operations/

recovery (loss control spending?) - Supply chain

» Quality assurance » Transportation » Time to Recovery » Secondary Correlations (supplier of a supplier)

- Cyber – Limits on the Evil of Man? » Privacy vs. efficiency » What information is critical vs. nice to have

What I Wish I Knew

- Risk of Economic Nationalism - Onshoring, Election 2016, Brexit, etc… - Walmart

- Economic Value of Disaster Exposure - Coastal development - Ports - Cheap labor vs political instability

- What builds resilience