Commentary: This Year’s Hurricane Season Was the Costliest Ever. Now What?

March 27, 2018

This post was originally published on November 30, 2017 in Fortune.

Hurricanes Harvey, Irma, and Maria have created the costliest hurricane season to date, but this is also part of a trend of increasing frequency of billion-dollar weather disasters. And it’s creating a stark reality for American companies today. As large-scale disasters become more common, businesses must do more to invest in disaster preparedness beyond their own infrastructure and business continuity plans. The new normal requires business leaders to invest in the resilience of the communities in which they operate. This is not just a moral necessity. Spending on community resilience is also a sound business decision.

Take the pharmaceutical industry for instance. About 50 pharmaceutical plantsoperated by some of the largest drug companies in the world are located in Puerto Rico. All must now manage a major broken link in their supply chains—the loss of major manufacturing capacity due to the painfully slow recovery process on the island in the aftermath of Hurricane Maria. At the same time, news reports have indicated that many of the plants themselves sustained minimal damage. But lack of power, basic services, infrastructural capabilities, and—most importantly—human resources have prevented all industries from bouncing back months after Maria struck the island.

This is not to suggest that the business community is responsible for Puerto Rico’s recovery challenges. Hurricane Maria was a massively destructive event. However, these struggles are emblematic of the need for businesses to consider a “whole community” approach in disaster planning and investments. They illustrate why business leaders must look outside of their specific interests and expand their roles as partners with the various institutions which they depend on to buy their goods, and upon which their employees rely to live and raise their families.

So what is a company to do? Employee engagement programs and community outreach efforts are good first steps. Companies can train their employees on best practices regarding family disaster readiness and put processes in place to mitigate negative impacts on their employees and their families. Business leaders should also proactively reach out to institutions in their communities and facilitate connections with utilities, emergency management officials, and other government authorities when possible. Corporate social responsibility programs can also invest in community resilience building efforts.

Overall, companies should be active participants in any disaster planning efforts happening in the communities in which they operate. Any steps they can take to help shorten recovery and lessen the impact on the affected community will help everyone bounce back faster.

At the same time, the public sector must also help to engage the private sector. Public policy can be advanced to create new incentives for private participation in the public good. Leveraging capital markets is an emerging area showing promise, with social impact bonds and the recent creation of pandemic bonds from the World Bank, which create pre-disaster investments that function similar to an insurance fund after a triggering event.

With tax reform being debated in Congress, the timing is also good to explore incentives for more private sector involvement preparedness and mitigation before a disaster strikes. Removing barriers and providing assistance for public-private collaboration is also necessary if true partnerships are to be formed.

We should not lose site that a disaster that affects the whole community cannot be prepared for, or mitigated against without the effort of the whole community.