NEW YORK—Superstorm Sandy is profoundly reshaping the approach New York City officials and business executives are taking to storm risk, and they devoted a day in downtown Manhattan on the eve of the Atlantic hurricane season to discuss plans to deal with that exposure in the future.
"Fortune is the product of hard work and planning," New York Stock Exchange Chief Operating Officer Larry Leibowitz told attendees, "and you can't plan for every eventuality."
The event, held at the Exchange, was the "Kicking Off Hurricane Preparedness Season 2013" sponsored by The Travelers Institute; NYSE Euronext; the Partnership for New York City, and the Wharton School.
Leibowitz says planners need to consider every detail in preparation for a catastrophe, but officials cannot work in a vacuum. Private sector and the government need to partner in advance planning because "when a disaster happens it is just too late."
For the city of New York, Seth Pinsky, director, Mayor's Special Initiative for Rebuilding & Resiliency, and president of the New York City Economic Development Corp., says Superstorm Sandy was an idiosyncratic storm. The storm did not follow the normal path of most tropical storms along the East coast and meteorological events coalesced in a way that if Sandy arrived one hour earlier or later New York would have avoided devastation.
Indeed, Sandy is only the third time since 1878 that the city has found itself in the path of the most dangerous winds of a storm, in this case delivering record storm surge. Despite its rarity, Pinsky says we have to view Sandy as a "harbinger of the type of event that could happen in the future." New flood maps will double the number of residents within flood zones to more than 450,000, along with exposed commercial space expanding from 374 million square feet to 589 million.
Because of climate change, the risk to the city goes beyond a major storm, but can mean adverse impact from increased rainfall, prolonged heat waves and drought along with rising sea levels, making the need to plan for these vulnerabilities urgent, he says. New York is finalizing its re-building plans to protect the city that Pinsky says will be "ambitious and achievable." He adds there "is no point in setting your sights for the stars and not be able of getting off the launching pad."
Superstorm Sandy continues to be a learning event for the stock exchange, says Joe Mecane, executive vice president and head of Cash Execution for NYSE. The first lesson was personnel–getting essential people into the building while providing access to the Exchange for those working remotely. He says NYSE was lucky enough to have a few dedicated individuals who remained in the building throughout the crisis, maintaining generators and enabling it to reopen quickly. However, getting people in was a logistical challenge involving finding parking for those who could drive in, and arranging bus service for others. Those unable to get into the city had robust offsite computer capabilities, but widespread power outages made it impossible for people to power their devices or access systems. One lesson learned—employees now have solar powered devices and electronics to access Internet hot spots for working remotely.
Mecane says one failure of many disaster recovery plans was the relocation of offices in the event of a catastrophe. Many discovered a fatal flaw in their plan. Their remote offices were located in the region affected by Sandy, facing the same logistical issues as the home office.
For city officials, one lesson learned is dealing with evacuations. Assistant commissioner for strategic data, NYC Office of Emergency Management, Jim McConnell says evacuations not only need to be more extensive, but also have to incorporate more data from potential storm impact and typography. He says the city will soon release plans detailing evacuation zones that allow officials flexibility when issuing mandatory evacuations. Changes in how the weather service issues its warnings, including a new category for storm surge, will allow city officials to create a "finer line" when issuing evacuation orders.
Concerning the rebuilding process, Commissioner of NYC Department of Small Business Services, Robert Walsh, says the greatest challenge is helping small business resume operating. Financial resources are available, but communication and red tape remain major obstacles. He says the sections of the city to bounce back quickly were those with strong community business organizations.
Joan Woodward, president of Travelers Institute, says that studies show that after a catastrophe 40 percent of businesses never reopen, making it more crucial to get the message out to businesses that help is available.
Turning to consumers, Howard Kunreuther, co-director of the Wharton Risk Management and Decision Processes Center, says before disaster strikes, many individuals do not purchase insurance protection because they do not believe it will happen to them. The challenge is getting people to think about protecting themselves before an event and continue that protection afterward.
"We are all very myopic," he says. "It is very hard to get people to invest in protection before catastrophe strikes."
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