The Dublin flooding:

Its impacts on individual & business risks and effective risk management steps

Student Name: Xinyuan Zhang Student Number: 111118121 Course Code: EC3125

With thousands of houses and business premises hit by the severe flooding which happened in Dublin in October 2011, we have all seen that great losses have been brought into this city with various huge damages. Roads were blocked with

obstacles; shopping centres were destroyed by floodwaters whilst most householders suffered from their flooded homes and damaged personal possessions. The

devastating floods induced and increased individual and business exposures of a range of risks, and yet, luckily, a series of effective steps could be implemented by individuals and businesses to minimize these risks.

The effects on individual risks The flooding in Dublin increased various risks facing individuals in terms of physical assets, medical expenses, longevity, earnings and liability.

The serious flooding resulted from the torrential rain affected hundreds of householders in Dublin, and enhanced the physical assets risk exposures to individuals, especially in home and motor terms. According to recent reports, many

homes were left in chaos after the flooding, as essential household items such as furniture, flooring, heating boilers and electrical equipment had been floated away or rendered useless (Sean Crowe TD, 2011). Meanwhile, many motorists abandoned

their vehicles that were out of work or damaged by floodwater, and fled from the floods (Hegarty and Burca, 2011). In this situation, homes and motors experienced

great damages during the prolonged floods, which led to rising expected losses, and in turn made the physical assets risk increased.

Also, the medical expenses risk surged as a number of people were injured during the flooding. Some people had various degrees of physical injuries like fracture dealt out by floating furniture, while others suffered mentally due to losses of irreplaceable family possessions and financial burdens (Sean Crowe TD, 2011). As a result, injured individuals would have to pay a big deal of medical bills, which apparently made the medical expenses risk rise.

Simultaneously, the longevity risk also occurred when two people were reported died in that severe flooding. A 35-year-old woman drowned in her basement flat on

Parnell Road, and a Garda member was swept into the River Liffey and died (The Irish Times, 2011). Since these two people lost their lives, pensions seemingly were not possible to be received by them anymore, and this led to an expected loss in the future, which thereby caused longevity risk.

Accordingly, since some individuals were injured or dead in the floods, the earnings risk was engendered. These individuals would not be able to work in a certain period, because of death, injury, or temporary unemployment as some companies came to suspend after being negatively affected by the flooding. So, due to the floods,

potential earning losses would occur and the earnings risk increased.

Moreover, the possibility of car crashes was enhanced due to the bad weather and floodwater. In this case, some car drivers would face the liability risk if they drove Likewise, pedestrians were more likely to be injured

into another car and were sued.

by the rushed out furniture or the collapse of a house. If so, the house owners might be charged for medical expenses or compensation and face the liability risk.

The effects on business risks Simultaneously, many business organisations also suffered a lot during flooding, and diversified risks came along with the disastrous weather conditions. It is reported

that over 1,000 properties were flooded in the Dublin city area during last October's ''Monster Rain'' event (RTE News, 2011). The damage to assets risk, liability risk

and price risk facing businesses were all affected to some extents, while the damage to assets risk was dramatically enhanced by that unexpected flooding.

Due to the floods, hundreds of businesses in Dublin faced exposures of pure risk, particularly in terms of damage to assets. Businesses were destroyed during sudden

flash floods around the city.

During the severe floods, one of Europe's biggest

shopping centres, Dundrum Town Centre in Dublin, remained closed for days after floodwaters surged through the doors, destroying most stores as well as causing thousands of euro worth of damage (Cassisy, 2011). Higher expected financial

losses were caused, with the flooded premises and losses of stock and expensive equipment. Meanwhile, the public transportation industry also was negatively

affected by the floodwaters: hundreds of roads were flooded and blocked for obstacle clearness; Green Line Luas services were cancelled shortly, whist north side Dart services and northern commuter services were resumed; several flights delayed and some cancellations were announced at Dublin airport (Aoife and Charlie, 2011). The expenses of tracks repair and roadwork hereby surged and contributed to increasing expected costs. Except direct costs, there was also potential indirect costs,

such as the costs generated from business income/interruption exposures: as many businesses like shopping malls were interrupted, loss of sales from not being able to sell, operating expenses during shutdown like salaries and advertising, and property losses to major suppliers or customers also led to rising expected profit losses. Furthermore, the flooded properties market value in certain areas probably would decline in future, as people would regard those areas as flood risk areas and revalue the properties there. With all the situations above, the property losses and assets

damage appeared to be a large amount, as a result, the uncertainty and expected losses facing by enterprises greatly rose up, and higher pure risk facing businesses was evoked after the arrival of Dublin floods.

In addition to pure risk, liability and price risk were also induced by the flood. Liability risk increased as most insurance companies suffered great losses and tended to fraud if they did not have adequate premium loadings to cover all customer claims. It is announced on the Irish Insurance Federation (IIF, 2012) website that the estimated total insured cost of last October's floods has hit 127 million. This high amount of insurance bills pushed insurance companies to a fairly risky edge of bankruptcy and aroused inability to cover claims. Moreover, the commodity risk

increased, as the price of primary products tended to rise. Acres of farmlands were flooded by the torrential rain, and farmers suffered losses from missing mountain flocks and damaged crops (Mcgreevy, Kennedy and Connell, 2012). Due to farmers

losses and inconvenient public transportation, the primary product price was expected to rise and higher price risk hereby occurred for businesses like supermarkets.

Steps for individuals and businesses to mitigate risks Although the flooding is not evitable, the impacts of it on can be lessened with useful risk management measures which include five major steps.

The first step for individuals and businesses to reduce risks evoked by the flooding is to identify all significant risks that can cause losses. To support decision making

regarding flood defence strategies and protection standards, having insight into the possible consequences and risks of flooding is very important. Individuals should

take every possible risk exposures into consideration: drop in earnings, medical expenses, personal liability, longevity and so on. Likewise, businesses should think

about exposures of property losses, liability losses, losses to human resources and any other potential risks that might be induced by flooding.

After indentifying all the potential risks, individuals and businesses are supposed to evaluate the potential frequency and severity of losses. They can estimate the possibility of being flooded based on the historical data, and figure out total expected losses with reference to all the identified risks. Also, for some individuals and small

firms who have little experience in risk estimation, they can turn to consulting agencies for help and receive information from experts.

Then, it comes to the critical step: developing and selecting methods for managing risk. Loss control, loss financing, and internal risk reduction are three effective

methods that can be taken. To reduce the frequency and severity of risks which might be evoked by flooding, various reduced level of risky activities and increased

precautions can be implemented in advance.

Householders should have a sense of

security (for example, avoiding settling down in flood risk areas), and after receiving a flood alert, they need to take a range of precautions, such like sealing important personal, business and legal documents in watertight containers and place above flood height, taking furniture to upper floors or raise on a sturdy table, and securing vehicles to undermine detrimental flood impacts. For businesses, they should have a flood

plan in place, which include emergency contacts, a marked map for energy cut-off points, and external links, and make sure that all staffs know what to do in case of a flood. Also, key stock, equipment and possessions should be considered to give special protection from flood waters or move to safety places. Additionally, some

organizations also can register their businesses with an automated flood alert system so as to acquire flooding movement along with emergency action instructions. Except loss control, loss financing is another risk management method which can mitigate the cost of retained risks. Individuals and businesses can take pre-loss financing strategy, such like purchasing relevant insurances that would compensate for losses once floods happen. Enterprises also can transfer risks to others by

signing certain contracts that protect business from any lawsuits that may arise. Seemingly, post-loss financing strategy also can be used to cope with a loss after it occurs. Using cash, central funds or credit lines can sometimes be an efficient

answer to a risk financing problem for businesses, while householders can finance from usual deposits, which indicates that individuals should keep some idle funds for unexpected incidents like flooding. Besides, individuals and businesses can make

investments in information regarding flooding risk management profile suggestions (internal risk reduction method). However, individuals and businesses should have

an overall tradeoff between the expected reduced cost of losses and costs of risk management, and figure out the optimal risk management structure.

Afterwards, householders and businesses should move on to implementing the risk management methods they choose (step four), and monitoring suitability and performance of chosen risk management methods and strategies on an ongoing basis

(step five). During the last two steps, risk management strategies can be adjusted regarding the actual situation, and experiences acknowledged can be accumulated for the next flooding dealing.

Conclusions Last Octobers flooding in Dublin, which flooded thousands of houses and damaged numerous properties and possessions, has enhanced categorized individual and business risks and led to millions of euro losses. In this situation, householders were

exposed to physical assets, medical expenses, longevity, earnings and liability risks, while businesses were exposed to damage to assets risk, liability risk and price risk. The serious flooding resulted from the torrential rain affected hundreds of householders in Dublin, and enhanced the physical assets risk exposures to individuals, especially in home and motor terms. Also, the medical expenses risk

and longevity risk surged as a number of people were injured and two died during the flooding. The earnings risk was engendered since the injured individuals were not able to work for a certain period. Moreover, the possibility of car crashes was

enhanced due to the bad weather and floodwater, which in turn rose up liability risk. Meanwhile, due to the flooding, businesses experienced property losses and declined sales revenue. Also, the liability and price risk increased, as some businesses were in financial crisis and input price had a tendency to rise.

However, suitable risk management strategies can be applied by individuals and businesses to undermine those numerous risks. Risk identification, risk evaluation, the risk management method choosing, management method implementation and ongoing monitoring are five effective steps providing a framework for balancing the multiple complementary and competing factors that affect risk and mitigating the cost of losses to the minimal extent. It is important for individuals and businesses to capture risk

management steps in order to defend flooding disasters smoothly.

Word Count: 1942

References: Aoife, C. and Charlie, T. (2011) Traffic disruptions after floods, The Irish Times, 25 October [Online]. Available at: http://www.irishtimes.com/newspaper/breaking/2011/1025/breaking4.html (Accessed: 3 March 2012). Cassisy, L. (2011) Dundrum flooding response criticised, The Irish Times, 25 October [Online]. Available at: http://www.irishtimes.com/newspaper/breaking/2011/1025/breaking43.html?via =rel (Accessed: 3 March 2012). Hegarty, A. and Burca, D. (2011) Ireland floods: Garda swept away by swollen river, Daily Mirror, 25 October [Online]. Available at: http://www.mirror.co.uk/news/top-stories/2011/10/25/ireland-floods-garda-swept -away-by-swollen-river-115875-23513141/ (Accessed: 28 February 2012). Irish Insurance Federation (2011) Home page. Available at: http://www.iif.ie/ (Accessed: 10 March 2012). Mcgreevy, R., Kennedy, E.B. and Connell, S. (2011) Flood damage in east may cost tens of millions of euro, The Irish Times, 26 October [Online]. Available at: http://www.irishtimes.com/newspaper/ireland/2011/1026/1224306505841.html (Accessed: 12 March 2012). RTE News (2011) 1,000 Dublin properties flooded in October, 15 December Online]. Available at: http://www.rte.ie/news/2011/1215/flooding.html (Accessed: 10 March 2012). Sean Crowe TD (2011) Widespread flooding cause misery amongst householders across Dublin, 26 October [Online]. Available at: http://seancrowe.ie/latest-news/1-news/144-widespread-flooding-cause-misery-a mongst-householders-across-dublin- (Accessed: 11 March 2012). The Irish Times (2011) Severe flooding disrupts travel, 24 October [Online]. Available at: http://www.irishtimes.com/newspaper/breaking/2011/1024/breaking43.html (Accessed: 5 March 2012).