1301 Atwood Avenue
P.O. Box 7500 Johnston, RI 02919 USA
T: 401 275 3000 F: 401 275 3029 www.fmglobal.com
For Immediate Release
August 6, 2008
For More Information Contact
Steven Zenofsky, APR, Media Liaison
Phone: (401) 275-3000, ext. 1945
E-mail: steven.zenofsky@fmglobal.com
Study Reveals Most Large Companies Exposed to Natural Disasters
but Many Underprepared
2008 Natural Disaster Business Risk Study findings uncover potential business oversights
JOHNSTON, R.I., USA—A new survey of financial executives representing the largest
corporations in North America reveals almost all companies are exposed to natural disasters, yet
many of those firms are not well-prepared for such catastrophes and are not overly concerned
about the potential business impact.
The findings of the 2008 Natural Disaster Business Risk Study, commissioned by FM Global,
one of the world’s largest business property insurers, are based on the responses of 100 financial
executives from U.S.- and Canada-based corporations with at least US$1 billion in annual
revenue.
While 96 percent of financial executives said their companies have operations exposed to natural
catastrophes, such as hurricanes, floods and earthquakes, less than 20 percent indicated that their
firms were “very concerned” about such natural disasters negatively affecting their bottom line.
“The findings reveal a surprising and concerning gap between the levels of natural catastrophe
exposure among North America’s largest companies and their level of preparedness,” said Ruud
Bosman, executive vice president, FM Global, “especially given that, in the first half of 2008,
there were about 400 natural catastrophes worldwide with overall losses expected to top US$50
billion.
“Companies may believe insurance can fully protect them from disaster—even from its
intangible consequences. But they may overestimate their level of preparedness and
underestimate the extent to which their natural catastrophe exposures put their organization’s
supply chain at risk.”
-more-
Preparation Gap Spans Multiple Natural Catastrophes
The study findings indicate a consistent disconnect across three of the most common and costly
types of natural disasters: hurricanes, floods and earthquakes.



Hurricanes:
o
While 80 percent of companies have North America operations located in regions
exposed to hurricanes, nearly 50 percent reported they are not well-prepared for
a hurricane.
o
Nearly 80 percent of financial executives from those companies are not overly
concerned that a hurricane/typhoon or tropical cyclone could negatively impact
their company’s bottom line.
Floods:
o
While 90 percent of companies have North America operations located in regions
exposed to floods, more than 60 percent indicated they are not well-prepared for
a flood.
o
Almost 90 percent of financial executives from those companies are not overly
concerned that a flood could negatively impact their company’s bottom line.
Earthquakes:
o
While more than 80 percent of companies have North America operations located
in regions exposed to earthquakes, more than 70 percent revealed they are not
well-prepared for an earthquake.
o
Eighty-five percent of financial executives from those companies are not overly
concerned that an earthquake could negatively impact their company’s bottom
line.
Bosman added that the overall findings suggest it is prudent for companies to also consider the
implications a natural disaster could have on maintaining competitiveness, market share and
corporate reputation, should they be caught off guard.
“Companies can’t stop hurricanes, floods and earthquakes from happening, but by understanding
their business risk and taking preventive actions, FM Global has seen companies reduce their
natural catastrophe losses by 85 percent or more, often at minimal cost,” said Bosman. “Such
actions can mean the difference between a natural catastrophe being disastrous or being a mere
distraction.”
Methodology
The 2008 Natural Disaster Business Risk Study was commissioned by FM Global and
administered from May 2008 to June 2008 by Opinion Research Corporation, a research and
consulting firm founded in 1938 that helps private- and public-sector organizations worldwide by
providing objective, rigorous and fact-based market research.
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-more-
FM Global is one of the world’s largest business property insurers, with clients that include more
than one out of every three FORTUNE 1000-size companies in more than 130 countries. For
nearly 175 years, clients have worked with FM Global to develop robust property insurance and
engineering solutions to protect their business operations from fire, natural disasters and other
types of property risk. FM Global is ranked #583 among FORTUNE magazine’s largest
companies in America and was named “Best Property Insurer in the World” by Euromoney
magazine. With US$6.3 billion in policyholder surplus, FM Global is rated A+ (Superior) by
A.M. Best and ‘AA’ (Very Strong) by Fitch Ratings.
Key Findings
Natural Disaster
Hurricane/Typhoon/
Cyclone
Flood
Earthquake
Companies indicating
they have North
America operations
located in regions
exposed to such
natural disasters
Companies indicating
their operations are
not well prepared for
such natural disasters
Companies indicating
they are not overly
concerned about the
bottom line impact of
such natural disasters
80%
48%
79%
90%
84%
63%
71%
89%
85%
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