Flood Risks: What Can Organizations Do To Guard Against It?

With monsoon season setting in, many states in India are already experiencing flooding. In July, Mumbai was hit by the heaviest monsoon rains in two decades, killing at least 30 people and disrupting life in the city and nearby areas.  The districts of Kolhapur and Pune experienced heavy rainfall which resulted in flood-like situation. And over the last fifteen years, I have seen waterlogging in parts of Bangalore that have never experienced it before, while areas that were prone to waterlogging are witnessing increased flooding.

One of the main reasons behind this unprecedented and widespread damage is unplanned urban development and lack of drainage infrastructure. The situation is expected to worsen in years to come due to:

• Disappearing ground absorption thanks to developments.
• The challenge faced by civic authorities to keep drains clean and clear.
• Increased intensity of rainfall.

Over the years insurance companies in India and abroad have become very conservative when it comes to underwriting flood risk. They are often reluctant to provide their best terms and coverages. As a result, businesses are either uninsured or underinsured. If a company finds itself in either of these situations, their financials could come under substantial stress as flood damage repairs will have to be funded internally, or in extreme cases, through liquidating assets which could severely affect operations.

Challenges

Challenges faced by risk managers include the availability of sufficient, reliable data and engineered solutions to make informed flood risk management decisions.

Amplified risks

The realities organizations need to understand and address, from both property protection and business interruption points of view, are:

• Flooding will continue to happen.
• The intensity of flooding is likely to increase and lead to greater damage.
• It’s important to identify whether and to what extent they are exposed to such risks.

How to identify flood risks

Flood maps are available from leading global reinsurance companies and renowned flood modelling agencies. Typically they provide fluvial and pluvial flood data reflecting return frequencies.

For existing buildings:

• Companies can use the actual topography of flood maps along with the buildings’ finished floor levels to understand the expected flood depth for a particular return frequency.
• Companies can also consider using engineered solutions based on cost benefit analysis. These are bespoke solution tailor made to specific business needs.

For new buildings:

•  As a thumb rule, new facilities should be built outside the 500-year return frequency event.
• The finished floor levels of the buildings should be such that flood water cannot enter them. If this cannot be avoided, then physical barriers should be employed to restrict the flood water entering the premises.

Advantages of taking a risk management and prevention approach

1.  Corporations that eliminate property damage gain a competitive because they can continue to operate despite flood situations occurring.
2.  Organizations can reduce the impact of flood damage will be able to restart operations much earlier than they otherwise could, thereby reducing their business downtime. 
3. Knowing exact exposures and having a sound and well-practiced emergency response plan, equips organizations to keep their employees safe both before and after flood events.
4. By embarking on an active risk management path, companies will be able to increase their flood protection because they will be able to purchase sustainable insurance policies with bespoke terms and coverages. In the event these policies need to be claimed against, companies will have the peace of mind that they have appropriate cover that helps them recover quickly.