As natural catastrophes, from wildfires to flooding, become more frequent, organizations need to be well prepared and alert to the potential for complex environmental risks to arise. September is National Preparedness Month; the perfect time to plan ahead.
Create a plan — and follow it
Keeping an up-to-date emergency response plan outlining what to do in the event of severe weather events and associated environmental risk events is good business practice for industrial sites. At a minimum, the plans should include who to contact in the event of an emergency, including hazardous materials (HAZMAT) and emergency response vendors.
If or when the worst begins to unfold, it is important for the leadership team to be familiar with their plan and follow it. Not only does this approach help to mitigate loss, but the existence of and adherence to emergency response plans also demonstrates a company’s high standard of care. Many companies may do “dry runs” or “desktop exercises” to regularly test the adequacy of their emergency plans and ensure they are adhering to both state and federal requirements.
Communicate with stakeholders
When an incident occurs that could pose an immediate threat to the environment, property or human life, it is important to communicate early and clearly with regulators, law enforcement and emergency responders, community stakeholders and insurers. If local officials lack confidence in an organization’s ability to respond to an incident, they can — and often will — take control. This can result in significant financial and practical consequences. Timely communication can help avoid this situation.
Be proactive
In the wake of an incident that impacts others, consider a proactive approach to settling smaller claims or other impacts resulting from the incident such as costs for temporary housing or evacuation. Counsel and the insurer can help develop a strategy to proactively resolve legitimate claims, building goodwill in the community and with regulators.
Learn the right lessons
Even the most prepared company with the best of plans and execution can still experience significant losses due to the sheer force and unpredictability of natural catastrophes and resultant environmental damage. Company leaders should work with their counsel, consultants and insurers to review an incident and assess how to mitigate the chances of any future reoccurrence and/or response should another incident occur.
Working with a specialist broker and insurer that understands the complexities of environmental liability risk helps organizations to prepare for and respond to an environmental crisis, and to mitigate the potential financial and reputational impact.
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