The rain began falling across Europe on July 12. The storm started over the United Kingdom and swept east across France, Belgium, the Netherlands, and then Germany. There it stalled for two days. During the pause, more than 20 centimeters (7.9 inches) of rain fell in east Belgium and 15 centimeters – a month’s worth – in 24 hours in the west of Germany. 

Streams swelled, burst their banks and then the flash flooding started. Cars and houses were washed away; streets were smashed and covered in mud and, as the rain continued to fall, it triggered massive landslides so intense that part of the historic castle in Erfstadt, near Cologne, was carried away. At least 220 people died in Germany and Belgium. The damage has been estimated at up to €7 billion (about $7.9 billion) in insured losses. The New York Times noted that affected regions may not have seen rainfall of this magnitude in the last 1,000 years. 

Not long after, heavy flooding hit central China with the city of Zhengzhou, which produces half of the world’s iPhones, receiving over 61.7 centimeters (two feet) over three days – more than as much as falls in a typical year. More than 300 people died, 9,000 homes were damaged, 13 million people were affected, and the world was left with the image of a carriage full of people in an underground train growing desperate as floodwaters gradually rise towards the ceiling. It was a storm to be expected once in a thousand years, the Zhengzhou weather bureau said. 

Then, at the end of August, Hurricane Ida made landfall in Louisiana, USA, before travelling north, where its remnants caused record flooding on the north-east coast of the country, leaving 50 people dead and prompting the governors of New York and New Jersey to declare a state of emergency. Overall insured losses are estimated at $30-40 billion. 

Flood catastrophes result from a complex web of climatic, hydrological, and social factors. However, scientists were quick to see the fingerprint of climate change in the disasters. After all, for years, they have warned climate change will mean more flooding in China, Europe and elsewhere. For every degree Celsius of warming, the atmosphere can hold about 7% more moisture, which can supercharge rainstorms. 

Climate change is here – the precaution not yet  

The latest United Nations’ Intergovernmental Panel on Climate Change (IPCC) report was released shortly after the floods. It made clear that this year’s burst of extreme weather results from rising average temperatures. Disasters, such as the recent floods, will become even more severe as the water cycle continues to intensify as the planet warms. Each fraction of warming will bring greater rainfall, higher rises in sea levels and more intense droughts and extreme wildfires. 

Floods damages can also occur outside mapped river floodplains, and the losses suffered by the victims of flash flooding are often higher than those incurred along rivers, largely because of the unpredictable nature of flash floods. 

Business continuity management in focus 

Companies can prepare for such natural events with a flood contingency plan, also known as a business continuity plan, to reduce potential losses.  

It is not possible to make all sites equally resilient and measures should be weighed up against risk exposure such as geographical location and the risk of natural disasters, along with the importance of the site for value creation and its place in the supply chain. 

As well as sandbags and other physical barriers, flood mitigation methods could include securing empty containers that might be washed away, the reinforcement of roofs, especially in corner and edge areas, to dissipate the acting storm forces, and the fixing of roof superstructures, such as solar panels. 

Business continuity planning for crisis events – and floods are just one scenario among several – must be prepared in advance and revised regularly. Companies that take the time to prepare a comprehensive plan have a decisive speed advantage in getting back to operations quickly. 

Once an event has occurred, business owners need to react quickly to ensure the interruption remains minimal. A first step is to shut down electronic supplies and prevent runoff of pollutant-containing liquids so that any heavy metals or oils do not get into the groundwater. It is also important to secure and store important items and preserve machinery and production equipment. Important documents should also be secured. 

The second step, and a critical one for the later insurance claim, is to inspect and record the damage with the insurance expert and take initial drying measures in the production halls. 

Flooding is always an exceptional situation entailing increased risks during recommissioning. Machinery and equipment – primarily high-value and production-critical equipment – must be cleaned and dried comprehensively. Electrical equipment should be inspected before being switched on and repaired if necessary to prevent short circuits and subsequent ignition. 

Any debris from the interior and exterior floor inlets, gutters, downspouts and catch basins must also be removed. Ultimately, the safety equipment must be returned to service as quickly as possible, and ignition sources must be eliminated to avoid fire. 

Insurance in the age of climate change 

One of the questions arising with an increase in extreme weather events is whether companies should increase their insurance or if insurance companies will have to increase their premiums.  

The premium for natural hazards insurance depends on individual risk, coverage, and the customer’s property contribution. Other relevant criteria are the location of the risk, protection concepts, vulnerability of insured property, precautionary measures for business continuity management and maintaining/resuming operations after a loss event. 

Floods are just one example of weather extremes that businesses must be prepared for – heavy rain, drought and extreme cold can also take their toll.  Extreme weather events around the globe are an overdue wake-up call. Insurers and their corporate clients must prepare themselves for the fact that what was once a relatively well-defined risk has become more erratic, if not unprecedented, meaning effective business continuity planning is more vital than ever.


Thomas Varney

Thomas Varney is a risk consultancy regional manager of North America for Allianz.

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