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In the wake of Hurricane Florence, businesses across the US had another reminder of how unpredictable and unavoidable disasters are when they strike. According to a recent analysis by The Economist,1 weather-related disasters globally are occurring more frequently-increasing from 100/yr in 1970 to approximately 400/yr in 2017.
Other incidents are due to human threats. A 2017 industry report cited that data loss from cyberattacks such as ransomware, rogue employees and malware is up an alarming 400% since 2012.2
These disasters impact companies across the world daily with data loss, downtime and even potential permanent closure. The US Federal Emergency Management Agency (FEMA) reports that 40% of businesses do not reopen following a disaster, while another 25% fail within 1 yr.3
The most obvious damages are to infrastructure; and while the impact of disruption can be difficult to quantify, projecting the financial impact can be a much bigger challenge. Commodity industries must also contend with the effects that disasters can have on commodity prices. Estimating the cost impact of downtime and repairs must be viewed alongside daily price volatility and hedging strategies. To do this, one must have...