Activating Your Risk Transfer Measures in the Aftermath of a Super Typhoon

Once again, numerous countries in east and southeast Asia are bracing for a super typhoon. With sustained winds of up to 240km/h, Super Typhoon Mangkhut is the strongest storm of 2018 and predicted to be the most powerful to hit Hong Kong since records began. It eclipses Typhoon Jebi which hit Western Japan recently and Typhoon Hato which wrecked widespread damage in Macau last year.

The strongest storm to hit Western Japan in over 25 years, Typhoon Jebi reached wind speeds in excess of 170km/h, inundating parts of Japan with up to 50cm of rain, causing landslides and flooding. Tens of thousands of people were left without power, and more than a million people had to be evacuated. Severe flight disruptions have also followed in the wake of the typhoon, with Kansai airport mostly underwater leaving thousands of passengers stranded. The bridge connecting the airport to the mainland was also severely damaged, further aggravating disruptions to the airport operations.

As a result of the anticipated full extent of damage, there will be a number of significant challenges ahead for businesses as production is hampered. High water volumes and debris mean many roads are inaccessible and the main road bridge connecting the main airport in Osaka to the mainland has been damaged. The response in assisting our affected clients is being led by our experienced Japan-based claims team, with regional support as required. We expect similar challenges following Super Typhoon Mangkhut and the Marsh Claims teams are on standby in the countries likely to be affected by this latest Super Typhoon.

Natural catastrophes can challenge the recovery plans of the most sophisticated organizations, even when those organizations are not directly impacted. Global supply chains are often stressed when natural catastrophes impact Asian manufacturing and service hubs. Factoring the increasingly complex, tiered supply networks that can magnify the reach of natural disasters, we recommend that Insureds carefully examine the potential impacts of typhoons on their operations.

Take these steps, if any of your operations are affected by the typhoons:

• Account for affected colleagues. Ensure that human resources policies for dealing with temporary absences are well-understood at all levels, that roles and responsibilities are covered by others as needed, and that disaster-relief and humanitarian assistance plans are activated.
• Call your broker. Your insurance advisor can support your business recovery, especially in light of any service interruption issues or property damage.
• Closures of operations like the Osaka airport in Japan has forced many manufacturers of key components scrambling to identify alternate cargo hubs, carefully track and document details in the event of a supply chain disruption. This will assist in the accurate measurement and presentation of claims.

The latest typhoons again highlight the need for preparedness and recovery plans to address your risks around the world. Having a business continuity plan and/or appropriate transfer of risks are the best ways to mitigate disruption to operations following natural disasters.

Marsh’s Client Advisory Services has a full suite of services on offer to assist clients in managing their risks, ranging from identification, mitigation and recovery through to designing an appropriate programme for the transfer of risk.