Cedric Stephens | Minimising the impact of disasters

The stimulus for today’s article is Roman Catholic priest, Rev Father Donald Chamber’s letter to the editor, ‘Technology cannot substitute humans’ published in the The Gleaner on July 14.

Business success, he argued, is dependent on achieving the proper balance between technological advancement while preserving human-centric values. “We must be emancipated from the historical ideology of sidelining humans for profit” was the key point of his case.

Kingston Freeport Terminal Limited, KFTL, is the Jamaican subsidiary of the French transnational CMA CGM. Its predecessor companies were founded during the mid-19th century. The parent company has its headquarters in Marseilles. CMA CGM operates in 160 countries through 400 offices, 750 warehouses, 160,000 employees, and a fleet of 620 vessels. The company had revenues of US$47 billion in 2023.

KFTL executed a 30-year concession agreement in 2015 with the Port Authority of Jamaica in respect of Port Bustamante. Under the agreement, KFTL will “develop, maintain, finance, expand, upgrade, and operate” the 94-hectare Kingston Container Terminal at Port Bustamante. The agreement was framed to capitalise on the expansion of the Panama Canal and to exploit business opportunities created by that development.

The three opinion pieces in the Business section of last week’s Sunday Gleaner were, predictably, but independently, written against the background of Hurricane Beryl. Mine, ‘Improving the Design of Disaster Response a National Imperative’, was crafted from the metaphorical altitude of 30,000 feet.

It was not meant to address the problems of 250 small-business operators in south Manchester and other areas throughout the island who are seeking government assistance to help their recovery efforts or the thousands of house owners whose houses have been damaged or destroyed, or the many small farmers whose estimated crop and other losses have been provisionally estimated at $4.73 billion. It was written to highlight the threats posed by climate change and summarise some parts of the Government’s strategy to fund the inevitable financial consequences of catastrophic events.

Today’s article will examine how businesses and individuals will be affected and share some ideas about what they can do to minimise the impact of future events like Beryl.

Local property insurers, for reasons best known to themselves, have never seized the opportunities to fill the information gaps in relation to the catastrophes Jamaica faces. The industry lobby is focused on providing post-Beryl information about the ‘average clause’. Climate change, the 1,000-pound gorilla, and the predicted ‘2024 hurricane season from hell’, are overlooked.

Sandra L.A. Minott, in an ODPEM Supplement on June 7, 2001, wrote that the island of Jamaica is exposed to virtually all the natural and man-made hazards, causing substantial losses of lives and property. Important economic sectors are affected repeatedly.

“The challenge is to ensure that minimising the effects of the hazards becomes a more important part of the development process,” Minott wrote.

Insurers can play an important role in that process.

Unfortunately, Jamaica’s risk-bearing industry has not changed significantly during the past 23 years. Most local insurers appear unable or unwilling to share the institutional knowledge they have accumulated in insuring buildings and other property and paying thousands of claims for hurricane damage to help citizens and society at large to protect themselves despite the threats facing the island.

Why, for example, hasn’t the regional insurance lobby, Insurance Association of the Caribbean, partnered with climate scientists at the University of the West Indies, such as Professor Michael Taylor, to advocate for public policy measures to improve resilience?

KFTL management’s decision, in the wake of Hurricane Beryl, to share information and advice, experiences, best practices, policies, and procedures from its global knowledge base with local interests, which were outlined in last Tuesday’s Shipping Industry Feature, should, therefore, be recognised and applauded. It should be viewed in the context of the recent confidence surveys conducted by the Jamaica Chamber of Commerce, which found that 96 per cent of respondents were unprepared for the effects of climate change while only four per cent said they were prepared. Similarly, 97 per cent of businesses were unprepared, while only three per cent felt they were prepared.

Here are some excerpts from KFTL’s, and by inference, its parent company’s recommended best practices that can be applied to all types and sizes of businesses and to individuals:

1. Assign responsibility for the management of risks. This person’s key functions should include the identification of potential risks, the implementation of plans to eliminate or reduce the threats, and to guarantee an effective response plan.

2. Businesses located in flood-prone areas must adopt mitigation efforts to reduce flooding.

3. Draft a hurricane-preparedness plan and test its effectiveness and the employees’ ability to properly execute it. (Assistance can be sought from the Office of Disaster and Emergency Management or from the artificial intelligence tool that is embedded in some browsers).

4. Form mutual-assistance agreements with other businesses and develop relationships with emergency-response agencies.

5. Maintain clear flood-drainage systems in and around the premises to minimise flooding.

6. Prioritise the safety of employees and promote the preparation of disaster plans at the employees’ homes.

7. Maintain open communication channels with customers and suppliers.

Corporate social responsibility, CSR, was the theme of Fr Chambers’ letter. It is the idea, according to my AI assistant, “that businesses should operate according to principles and policies that make a positive impact on society and the environment. Through CSR, companies make decisions driven by financial gain and profitability, while also considering the impact of their actions on communities and the world at large. It goes beyond legal obligations, encouraging ethical, sustainable, and responsible business practices. By voluntarily adopting CSR, companies seek to benefit consumers, shareholders, employees, and society”.

KFTL’s sharing of its risk management best practices with local enterprises and individuals should be viewed through these lenses.

Finally, overseas sources say the country’s Excess Rainfall Policy with the CCRIF SPC was triggered by Hurricane Beryl. Another payment of approximately US$10.3 million or J$1.6 billion is due to the Government. The total payouts from Beryl will amount to J$4.1 billion. MPs Mikael Phillips and Fitz Jackson’s comments about this programme during a 2017 PAAC meeting, as stated last Sunday, have turned out to be wrong.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to aegis@flowja.com or business@gleanerjm.com.