Two thoughtful articles in as many days from the Financial Times examine broad consequences of the Hurricane Katrina disaster from the business, economic, political and social standpoints.
In the first, a feature on disaster planning, the FT says the consequences of Katrina for businesses worldwide are likely to be significant. Insurance claims are expected to run to many billions of dollars, and the closure of oil refineries is already causing a surge in fuel prices in the US.
The FT quotes from Why Some Companies Emerge Stronger and Better from a Crisis, a seminal work on crisis planning and management by Ian Mitroff, published last January:
[…] Prof. Mitroff argues that businesses should develop emergency operational procedures, but these must go hand-in-hand with methods for coping with the shock and grief employees may feel, particularly if they and their families are among the victims. When planning for contingencies, managers must think creatively.
It is generally agreed that those companies that plan for and manage major crises such as natural disasters have a competitive advantage over those that do not. They are able more quickly to replace damaged stocks, find alternative supply sources and transportation routes and resume profitable trading.
The FT’s article discusses examples of what some US companies have done in past crises and concludes with these five steps to disaster planning:
- Accept that disasters and crises are inevitable, and must be planned for
- Assess threats from as many quarters as possible – not just the particular hazards of your own industry, but also universal and complex threats
- Disasters affect a company’s stakeholders in different ways; take all their views into account during planning
- Because disasters can affect every part of the company, look at the whole business and consider what role each unit or department can play in planning and recovery
- Recovery from disaster is not a process or problem-solving exercise; steps to deal with shock and grief, not just among employees but in the wider community
Financial Times | Softening the blows of disaster (paid sub) 4 September
It’s clearly apparent that many businesses in the US (and elsewhere) have moved with alacrity to mobilize their employees and marshal organization-wide efforts to provide help and assistance, either directly to those in the disaster zones or indirectly through stimulating donations to aid organizations, or both.
No such alacrity by top-level political and other public leaders is illustrated in a lengthy and critical opinion piece on the political repercussions for the US government arising from Hurricane Katrina, published yesterday:
The reckoning after Katrina is likely to be divisive for the US. After September 11 it was easy to focus the country on the enemy abroad. Even after national investigations revealed missed opportunities to thwart the terror attacks against New York and Washington, the country’s anger remained aimed at Osama bin Laden, al-Qaeda and the governments that harboured them. Support for Mr Bush’s handling of the war on terrorism has consistently remained his strongest appeal with the public.
The response to the hurricane will prove a much tougher test. Before the arrival of military convoys in New Orleans last Friday and the expansion of relief operations over the Labor Day long weekend, the image seared into the minds of American television viewers was of residents, most of them poor and black, pleading for help that did not rapidly come. Leaders of Congress, which returned ahead of schedule on Friday to approve $10.5bn in emergency aid, are calling for hearings into why the response to the hurricane was so slow and inadequate. Senators Susan Collins and Joseph Lieberman, who were instrumental in the creation of the commission that investigated the September 11 attacks, have set the first hearing for tomorrow to investigate “the lack of preparedness and inadequate response to this terrible storm”.
Which leads to some soul-searching questions and one plausible look at the broad consequences and inevitabilities:
Many questions will be asked in the weeks to come as the country struggles to help the living, bury the dead and rebuild. Why were emergency authorities so ill-prepared for a disaster that had been thoroughly anticipated? Why was it the poor and black who bore the brunt of the storm while those better off heeded the order to evacuate? And will Mr Bush, as he did after September 11, recover politically from a shell-shocked response in the first two days after the hurricane hit or will there be lasting repercussions for his presidency and for the Republican party?
[…] Hurricane researchers and engineers had long warned that a Category 4 storm, with winds of at least 140mph (224km/h), would damage the levees surrounding New Orleans and leave the bowl in which it sits filled with water, in some places as much as 20ft (6.1m) deep. In 2004, nearly half the area’s residents evacuated as Hurricane Ivan, which hit the US as a strong Category 3 storm with winds of 130mph, approached New Orleans before veering away and striking more sparsely populated areas of Alabama.
Shirley Laska of the Center for Hazards Assessment, Response and Technology at the University of New Orleans wrote in the aftermath of Ivan that the city had narrowly escaped disaster. Had it struck directly, she predicted, the result would have been massive flooding and damages exceeding $100bn – which is indeed the initial estimate of the damage that Katrina has caused.
[…] While modelling showed that the levees would be overwhelmed by anything stronger than a Category 3 hurricane, funds for storm defences in Louisiana had slowly been drying up as Washington faced a ballooning budget deficit and growing costs for the war in Iraq. Even if more money had been forthcoming, experts say it would have taken many years and billions of dollars to create barriers capable of protecting the city from a storm as ferocious as Katrina. On top of that, many of the natural wetlands that once protected the coast from storms have been disappearing.
That should raise serious questions about whether New Orleans can safely be rebuilt on its present site. But the US has a long history of rebuilding after natural disasters in ways that make the next one inevitable.
Financial Times | Katrina leaves no external enemy to blame (paid sub) 5 September
Related NevOn posts: