What has been memorialized as “Frankenstorm” might be better remembered as the event that changed the relationship between weather and the seemingly-unrelated financial services sector forever.
For years the business-owners of Florida and the Carolinas boarding up shop windows and fortifying with sandbags have been a familiar sight, the normative b-roll footage of any report on impending tropical mayhem. For the owners of parasail operations and bed and breakfasts—and even dentists offices and real estate agencies—situated along the lower half of the eastern seaboard, the business lost and physical damage inflicted major weather events, sometimes more than once per season, have long been considered part of the cost of doing business.
But for the largely New York-based financial services industry, weather has hardly been a major concern beyond the occasional above-average snowfall. While hurricanes blow kayakers off course along the coast of Georgia, New York traders keep trading and tickers keep ticking—until Hurricane Sandy.
As tales spread across the city of buses reserved exclusively for the employees of well-heeled firms, IT staffs working twenty hour shifts and physically moving company servers to higher ground, and the all-out arms race for generator power, a new imperative gleamed like Goldman Sachs above an island blanketed in darkness: in a post-Sandy Manhattan economy, preparedness means something different.
In the weeks following Sandy, the Financial District has been abuzz with talk of new plans for The Next Big Storm. They are concerned primarily with the physical—keeping the lights on, getting employees to work, fortifying technical resources.
But the fallout from lost business and damages associated with major weather events must be anticipated and planned for financially; particularly in a part of the country uniquely responsible for a hefty portion of the GDP, disaster must now become a part of our budgets and our bottom lines. New York offices will certainly benefit from a battening down of the logistical hatches, but the financial services industry will have missed the lessons learned by boardwalk t-shirt vendors if they concern themselves exclusively with generator fuel.
There is no question of if New York will experience another Sandy, there is only a question of when. When the rains begin to fall as the next major weather event arrives to visit its wrath on this precarious city and its economy, let’s hope it’s met with strengthened emergency resources, a fortified electric grid, and a financial services industry whose balance sheets are ready for the flood.