Hurricane Sandy or cyclone Nilam; is the banking industry
geared to handle natural disasters?
“2 days worth of economic activity amounting to $20
billion lost,” “potential insured losses equal $15 billion and counting”… read
the grim headlines. But there’s always a
softer side. Since the storm hit early in the quarter, and operation clean-up amounts
to $20 billion, the real blow on America’s GDP would be zero. Another silver
lining is rebuilding will create new jobs. In fact, the construction industry
will experience a boom. A multiplier effect to the tune of $36 billion will
surely make the mood upbeat.
Devastation is more in terms of damage to homes and small
businesses like restaurants which have no scope for rebound. Besides, standard
insurance in the US does not cover flood damage. Insurers like Chubb, Allstate
and Travelers will have to bear the brunt due to their presence in the affected
areas. Rebuilding is at the cost of investment. Also, when external money is
pumped in, it could slow down growth at the state level.
India too, has witnessed a similar calamity though on a
smaller scale. The poetry-inspiring, Coromandal Coast, faces the fury of
tropical cyclone, Nilam. Paddy and maize crops destroyed. An oil tanker ran
aground, off Marina Beach. Fishing operations suspended. Economic losses pegged at Rs 70-80 crore, an
additional Rs 20 crore daily, until fishing operations are resumed. Fishing is
the only means of livelihood for 591 villages in Andhra Pradesh. Add to this,
the detrimental effect on Mahabalipuram, a popular tourist destination, now deserted
due to closed hotels.
Do banks have a unique disaster management policy to
speedily mobilize relief funds? Country’s cyclone risk mitigation project,
initiated in 2009, for a 5-year span has been unable to strengthen vital
communication infrastructure, crucial for sounding alerts and warnings.
Villages lack sirens, alarm bells; have no access to radio, television or
internet. Banks can pitch in with technical and implementation assistance,
especially now with thousands rendered homeless.
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