"Floods and flash floods happen in all 50 states," says the National Flood Insurance Program. Though not all flood damage can be prevented, much of it can be avoided. And if it were, businesses would benefit from less risk and fewer losses.

Flood Losses
During a good year in the United States, flood losses might be only a little over a billion dollars. But during a bad year, this figure can rise to more than $19 billion, says the National Oceanic & Atmospheric Administration (NOAA). Large-scale flood disasters can propel this number even higher — damage estimates for the New Orleans flood are as high as $81.2 billion. But it doesn't take a New Orleans-sized flood to cause damage and losses. About 90 percent of flood damage in the United States is caused by less than 1 meter of water, says U.S. Flood Control Corporation.

Estimated losses associated with this year's flood damage in states such as North Texas, Oklahoma, Ohio, Minnesota, Illinois and Wisconsin continue to mount. Though insurance companies must calculate losses precisely, from a hydrologic view, it's an imprecise business, says NOAA. What's new is that with the quickly rising costs of construction, the losses will grow significantly.

Reports on flooding show that the business losses result from shipping problems, water damage to products in storage, and tanks containing air or light gases can float away. Also, fast moving water can cause structural damage.

Floods also present a variety of more serious threats: fallen power lines are especially dangerous; stored chemicals can dissolve and flow downstream, creating health hazards and liability; and oil slicks pose a number of health and safety concerns.

Flood damage continues after high water recedes, too. For instance, rusty nails can cause tetanus, mold can grow in equipment and ducts and waterborne microorganisms may contaminate potable water supplies, according to the Occupational Safety and Health Administration.

But more important than flooding's affect on business is that a large percentage of flood-associated losses can be prevented with knowledge, planning and good management. For those losses that can't be prevented, insurance offers a way to control risk.

Avoiding Flood Damage
Staying out of the floodplain makes sense. Governmental and insurance agencies have floodplain maps. However, old maps may be misleading; changes in the watershed above your manufacturing plant may increase the floodplain area, suddenly putting your site in the floodplain. Usually, more impervious surfaces (paved roads, and roofs) lead to higher peak flows. Thus, always ensure you look at a recently delineated map.

There is also the possibility that storms are becoming more intense and long-lasting than they were. This, too, changes the potential effects of a 100-year storm (has a 1 percent chance of occurring) and thus the floodplain limits.

Also, keep in mind that a floodplain map may not cover the full extent of a perfect flood — that's one that occurs because of a heavy and long-lasting rainstorm that falls on frozen ground with melting snow on top of it. And if this type of flood occurs in a hilly area, then the damage can be fast and the floodwaters deep.

Given such threats, some companies resort to berms, levees, sandbags and tubes to keep floodwaters away from buildings, storage areas and tanks. However, in many places, construction of berms or levees requires permission or authorization from public agencies because the landscape changes lead to higher-velocity floodwater and deeper water to downstream landowners. Sometimes, it may cost less to move operations to higher ground.

Flood Insurance
Smart business managers now realize that insurance companies do not pay for flood losses if they can prove the cause of damage was wind-related — think Hurricane Katrina, Mississippi and Louisiana. Thus, make sure to carefully examine any insurance policy to prevent misunderstandings that could result in exceptionally high costs.

With the official start of spring, melting snow and rains have already caused flooding across the country. Businesses should make sure they have flood insurance, according to the Insurance Information Institute (I.I.I.), says InsuranceNewsNet.com. If you purchase insurance, remember to review it yearly after you recalculate the cost of reconstruction.

To begin assessing potential flood losses, consider the following: Have you checked your flood insurance policy and nearness to floodplain limits recently? Have you discussed the probability of suffering flood damage with your supply chain partners — especially transport services?

Resources

Resources: Flood Facts
The National Flood Insurance Program

Fires and Floods Lead the List of Largest Red Cross Responses
by Sandy Smith
Occupational Hazards, Dec. 20, 2007

OSHA FactSheet: Flood Cleanup
U.S. Occupational Safety and Health Administration, 2003

Glossary Terms
U.S. Army Corps of Engineers

Is Your Business Insured for Flood Loss? Melting Snow and Spring Rains Can Cause Damage, Cautions the I.I.I.
InsurnaceNewsNet.com, March 20, 2008

Additional:

Forecast Calls for More Floods as Rivers Rage
Associated Press (via CNN.com), March 24, 2008

National Flood Programs and Policies in Review 2007
Association of State Flood Plain Managers

Welcome to the Floodplain Management Association!
Floodplain Management Association