Flood Damage Can Erode Companies’ Long-Term Value
According to a study commissioned by FM Global, flood disruptions could cause a company’s stock to fall dramatically over the succeeding 12 months. The study says that decline in stock value is a result of investors losing confidence in the decision-making of company officials.
Researchers came to that conclusion after studying 71 of the world's largest publicly traded companies. All of those firms reported financial damage from a major flood event recently. A year after those flood losses, the companies' shareholder value fell by an average of 5 percent.
“The findings make a strong case for making resilient choices, including smart site selection, emergency planning, structural reinforcement, elevation of critical machines and equipment, and use of flood barriers,” said Bret Ahnell, executive vice president at FM Global.