Our offices are located in Denver, so throughout the winter, and even sometimes when it seems like it should be summer, we keep a close eye on what the forecasters are saying. We winced slightly at recent reports that promised more polar vortex this winter. Of course, it depends on who you listen to. The National Weather Service says vortex! The Old Farmer’s Almanac isn’t quite as frightening. But when it comes to long term predictions, we can be certain that weather will be the source of problems sometime over the next few years, it’s just a fact of life.
The economic impact of the polar vortex
CBS News reports that the economic impact of last year’s polar vortex could reach $5 billion. Lost productivity, increases in heating costs, and drops in consumer spending were some of the biggest financial hits, with flight cancellations smarting for the airline industry at $1.4 billion.
Bloomberg reported that freezing temperatures and snow put the freeze on earnings, as well, though the article also mused that companies like McDonald’s and General Motors might have been using the cold to put the big chill on rumors about their cooling performance.
The truth is, the weather – mild or freezing, snowy or clear– will impact each business differently. Here in Colorado, snow is good business for the ski resorts, and all of us celebrate using four wheel drive once the snow hits, but just a touch of the stuff in a town like Dallas or Atlanta can put an entire region out of business for days.
Bad weather can be the cause of work stoppages and property damage, business face a host of additional issues due to weather. For example, the polar vortex of 2014 put a huge strain on the energy sector. The North American Electric Reliability Corporation found that the polar vortex caused curtailments and interruptions of the fuel supply, making industry vulnerable. The supply chain at large was at risk, as transportation providers (water, land, and air) slowed down or stopped completely during storms and freezing weather. Extreme cold in regions where freezing temperatures are far from the norm caused frozen pipes and many related nuisance issues at factories and work sites.
You may need more than a shovel
A second polar vortex could upset U.S. GDP forecasts, warns the International Business Times. Have you considered what kind of impact another winter with sustained freezing temperatures could mean to your business, your industry, or your supply chain? Sit down with your team and consider some of the most important projects you’re working on over the winter months and decide if you should make any contingency plans. Consider any safety issues you might want to address from a facilities standpoint before the weather gets too cold, and pre-order essential parts or shipments that would put you out of business if you were without them for more than a day or two.
The lesson we should take from the polar vortex is being prepared can save you.
As you make preparations for the winter months, work with your broker to make sure your business, your facilities, and even your key executives are covered by the right kind of insurance. Winter storms take a toll on property, but can also keep your executives away from key meetings or other critical functions that can make or break deals. With the right kind of insurance in place, you can feel the assurance of good coverage, even when you’re covered in snow. Let us know if we can help you better understand how enterprise risk captives can help shape your insurance picture.