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Paying for Hurricanes

By Grace Beck, student writer

With recent hurricanes Irma, Maria, and Harvey, the coastal regions critical to global supply chains and economies have taken a hit. Not to mention islands like Puerto Rico, who are quite literally surrounded by crises.

houston store
Local businesses in affected areas will feel the impact of hurricane season for months [photo credit: Anne Beck].
Jason Miller, assistant professor of supply chain management at the Eli Broad College of Business, discussed how companies in the logistics sector prepare for natural disasters like hurricanes as best as they can. “Carriers generally move their trucks and employees out of harm’s way before storms begin, but one of the most effective ways to hedge for these events is to have a diverse clientele spread across multiple regions,” he said.

The human population along coastal regions and in Atlantic Islands is more dense than ever before, meaning that the costs of relief associated with these storms will keep rising. According to Broad’s International Business Center’s globalEDGE blog, researchers estimated that tropical storms have slowed the annual growth rate of GDP by about 1.3 percent. JP Morgan estimates that damages from Harvey have already reached around $30 billion (and this is just one month after the storm hit).

“In the town of Dickerson in Southern Texas, 88 local businesses were destroyed by the hurricane. These businesses are closed, and now their employees are out of a job,” Anne Beck, Red Cross volunteer in Houston, said. “ I have met several people who have lost their homes and cars due to the flood, who are now one step away from being homeless.”

According to globalEDGE, researchers have found that after a cyclone strikes, it takes a full 15 years for a country’s economic growth to fully stabilize. Cyclones affect 35 percent of the world’s population and with each new storm, new costs are added. Little things like road signs, and guardrails are often overlooked, but quickly add up to a large sum of money. As an insight, repairing the road damage after Katrina reached $800 million.


Eli Broad College of Business

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