The operations, future cash flow and market valuations of companies can all be adversely affected by natural disasters, but CFOs across the world do not usually effectively communicate these risks, according to a study in The Wall Street Journal.
FM Global, a mutual insurance company, analyzed 94 regulatory filings submitted by U.S. business to the Securities and Exchange Commission for the 2017. Every filing mentioned Hurricane Irma, Harvey or Maria.
FM Global recommends that companies with a significant international presence think about the potential effects of natural disasters and climate change in the next two to five years. Worst-case scenarios include the loss of an important production facility or supplier, and closing facilities or markets can help mitigate these risks.
"Relying on a single port, a single rail line or a single river presents a risk," said Eric Jones, global manager for business risk consulting at FM Global.