The Top 10 Natural Disasters of 2011: Global Supply Chain Risk

Natural disasters, such as earthquakes, hurricanes and tsunamis continue to have a devastating effect on communities and businesses. Due to their uncertainty companies are often ill- prepared to deal with the widespread disruption they can cause to the supply chain.

The events of 2011 brought supply chain risk management back into the boardroom with a bang. With economic losses reported by Munich RE around US$ 280bn, 2011 was the most the expensive natural disaster year on record. Insured losses also reached record highs of $US 105bn.

Cold Chain IQ looks back over some of the most costly natural disasters in 2011 to impact the global supply chain:

January: Floods Australia Brisbane River burst its banks. Tens of thousands of buildings flooded. Losses in agriculture and mining.
Overall losses US$ m: 2,800
Insured losses US$ m: 1,875

February: Cyclone Yasi Australia Category 4 cyclone. Buildings and vehicles damaged/destroyed. Ports closed, rail services suspended. Losses to agriculture. 180,000 homes without electricity.
Overall losses US$ m: 2,500
Insured losses US$ m: 1,300

February: Earthquake New Zealand Mw6.3, widespread liquefaction. Ten multi-storey buildings, 10,000 buildings damaged/destroyed.
Overall losses US$ m: 16,000
Insured losses US$ m: 13,000

March: Earthquake, tsunami Japan Mw9.0, tsunami 5 km inland. Many coastal areas totally destroyed. Severe losses to industry and 40,000 economy Fukushima Dai-ichi plant: nuclear reactor damaged, radioactivity released. 6,000 injured
Overall losses US$ m: 210,000
Insured losses US$ m: 35,000

April/May Severe storms, tornadoes USA

3.-5.4 Severe storms, tornadoes >20 tornadoes, severe hail. Buildings and vehicles damaged/destroyed.
Overall losses US$ m: 3,500
Insured losses US$ m: 2,000

22.–28.4. Severe storms, tornadoes >160 tornadoes up to EF5, severe storms, hail, towns, cities (esp. Tuscaloosa), loss/damage to thousands of homes, vehicles and an airport destroyed. Losses to industry and agriculture. 269,000 homes without electricity.
Overall losses US$ m: 15,000
Insured losses US$ m: 7,300

20.–27.5. Severe storms, tornadoes >100 tornadoes up to EF5, torrential rain, hail, airport hangar, >10,000 buildings damaged/ destroyed. EF5 tornado hit Joplin, Missouri (158 deaths). 75% of Joplin destroyed. Roads closed.
Overall losses US$ m: 14,000
Insured losses US$ m: 6,900

June /July: Floods, landslides China: Torrential rain. 130,000 buildings damaged/destroyed. Hundreds of bridges, roads and several hydropower plants damaged/destroyed. Heavy losses to agriculture. 2.3 million evacuated.
Overall losses US$ m: 2,000

August: Hurricane Irene, storm Caribbean/North America Category 3 hurricane. Hundreds of thousands of buildings and vehicles damaged/destroyed.
Overall losses US$ m: 7,400
Insured losses US$ m: 5,600

August–October: Floods Pakistan Dykes breached, 6,000 villages inundated. Bridges washed away. Heavy losses to agriculture and livestock sector.
Overall losses US$ m: 2,500

August–November: Floods, landslides Thailand Torrential rains. One million buildings flooded/damaged. Seven industrial parks inundated. Heavy losses to infrastructure, agriculture, aquaculture and livestock sectors.
Overall losses US$ m: 40,000
Insured losses US$ m: 10,000

November: Flash floods France, Italy Severe weather, mudslides. Thousands of buildings and vehicles damaged/destroyed. Heavy losses to infrastructure.
Overall losses US$ m: 2,100
Insured losses US$ m: 1,100

(Source: Munich RE Topics Geo 2011)

As the global economy remains uncertain, most companies can not afford disruptions to their supply chains and a resilient, flexible supply chain can also prove to be a competitive advantage for companies who can respond and recover quickly from major events.

Ken Davey, senior vice president, FM Global, said on the release of the FM Global Supply Chain Risk Study: "Delivering products and services when others can’t results in satisfied customers and opportunities to secure new ones. A fragile supply chain is clearly a competitive disadvantage if a disruption occurs."

With even minor disruptions to the supply chain resulting in the degradation of temperature-sensitive drugs, manufacturers and logistics providers must ensure build flexibility into their supply chains and have robust contingency arrangements in place to ensure product integrity of life science products.