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The Business Case for Preparedness
Relatively Mild Events Can Impact Employee Productivity, Building and Inventory Damage
May 24, 2008 12:38 AM
A relatively mild earthquake can result in significant losses especially to small businesses including losses in revenue, distracted and absent employees, building damage and inventory damage.
Source: "Effects of the 2001 Nisqually Earthquake on Small Businesses in Washington State", Jacqueline Meszaros, and Mark Fiegener, Economic Development Administration, U.S. Department of Commerce Seattle Regional Office, October 2002
Key Points:
* "The 2001 Nisqually earthquake was a large magnitude (6.8 Mw) quake that yielded relatively mild ground shaking. Yet it was the costliest natural disaster in Washington State history. The fact that a relatively mild earthquake can yield such significant losses may be the most important lesson Nisqually has to offer."
* "The most common disruptions from the quake were human and yielded hard-to-estimate indirect costs to businesses. Sixty percent of all small businesses reported that employees were distracted and unable to work for a period after the shaking stopped. In thirty percent of firms, at least some employees left work entirely to check on their homes and families."
* In the region a whole, excluding the most heavily damaged neighborhoods, approximately 20% of small businesses had direct physical losses. Sixteen percent lost less than $100 but 4% of the region's firms had losses amounting to 1% or more of their annual revenue. Losses were most commonly self-financed. Even the firms with the largest losses were more likely to self-finance than to receive insurance or other aid."
* Building damage was the most common and most costly form of direct loss in the quake. Large losses also resulted from damage to inventory and/or to data and records. Retail businesses were the most likely to suffer both building damage and inventory damage. Retail also reported the largest drops in revenue in the quarter following the quake."