Montgomery Quoted on How CFOs Can Prepare for Natural Disasters

Partner Jane Montgomery discussed the need for chief financial officers (CFOs) to conduct rigorous assessments when preparing their organizations for potential financial risk due to natural disasters and other unpredictable events.

“Obviously, you need to identify which of your assets are at risk, as well as those of supply partners,” Jane said. “Assuming you are in fact at risk, you need to think through the many complicated scenarios in which the organization may be affected. For example, a company damaged by a hurricane or flood may unintentionally contribute to an environmental hazard that impairs its reputation, resulting in a market share loss.”

Commissioned by FM Global, a white paper called “Master the Disaster: Why CFOs Must Initiate Natural Catastrophe Preparedness in 2019 and Beyond,” examined the findings from an analysis of 10-K filings of nearly 100 public companies. Many of those companies suffered property damage and business disruption from hurricanes in 2017 with losses of up to hundreds of millions of dollars.

Jane noted the importance of public companies adhering to Securities and Exchange Commission (SEC) guidance on climate risk disclosures. She also added that several state laws and regulations require the issuance of the climate-related reports and disclosures.

“All such disclosures must be taken into consideration by a company in putting together an effective disaster risk mitigation strategy,” she said.

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