April 7, 2017 by Angela Stelmakowich
When talk turns to the possibility of a major earthquake in Canada, Don Forgeron, president and CEO of Insurance Bureau of Canada (IBC), advises that the response should be to prepare, not to panic.
“No one should spend their day hobbled with anxiety over subduction zones and probabilities. We shouldn’t panic or overreact. What we should do is prepare,” IBC’s Forgeron said Friday in addressing the Greater Vancouver Board of Trade.
Preparing “smartly, wisely and, above all, realistically,” represents “an investment in our own safety, in our own community and in our shared future,” he said.
That said, preparedness means knowing not only what to do in the minutes and hours following a quake, but also “how we’ll respond to economic challenges in the following months,” Forgeron explained.
“That’s why governments and business leaders alike need to consider the months and years that would follow the moment of devastation,” he said. “Together, we need to be ready for what comes next – ready to confront any potential ripple effect that starts in one area of the economy and begins to spread.”
Although discussions of major earthquakes usually involve periods of hundreds of years or more between events, “there is a general consensus in the scientific community: over the course of the next half-century, there’s a 30% chance of a major quake happening here,” Forgeron reported.
Lessons from elsewhere in the world related to contingency plans, emergency systems and public education make clear “the imperative of putting in the advance effort” and taking preparedness seriously.
Governments here at home are increasingly taking measures that show preparedness has become a higher priority, Forgeron (pictured left) said.
He cited as examples the B.C. government’s move to invest more than $80 million to better prepare for floods, earthquakes and other emergencies; the National Research Council announcement of a five-year review of the National Building Code to help build smarter in light of increased weather-related risk; and the federal government’s 2017 budget assurances of the most ever investment in disaster preparedness and mitigation.
Planning exercises and early-warning systems “are crucial tools in reducing risk,” Forgeron emphasized.
Should a major quake occur in Canada, the depth and breadth of the “recovery effort is beyond anything we’ve ever dealt with. So preparedness is essential to our ability to react quickly and effectively in the immediate aftermath of a seismic event.”
A major natural disaster – the impact of which would extend well beyond the immediate devastation – would pose challenges to homes, businesses and Canadians’ way of life.
“In Japan, it took two full years simply to remove the debris caused by the tsunami. In Christchurch, there are still areas that are uninhabitable six years after the quake,” Forgeron pointed out.
“The reverberations can extend through every corner of the economy. Up to 40% of businesses affected by disaster never reopen. Another 29% fail within a year,” he said.
That being the case, a clear plan to protect Canada’s economy and ensure consumer confidence in the event of a major earthquake is needed, Forgeron emphasized.
Citing a study out of Columbia University, it “found a common thread in the aftermath of natural disasters – the less prepared a business is, the greater the challenge to recover,” Forgeron reported.
“How quickly we are able to respond – and how well we have prepared – will go a long way to determining how far the economic impact spreads, how many it touches and how long it takes to recover,” he argued.
Forgeron pointed out that a magnitude 9 quake off the coast of Vancouver would result in massive damage related to shaking, tsunami, landslide and fire. “We’re talking about more than $20 billion in insured losses alone,” and “$55 billion in uninsured losses – a burden that would fall on governments, businesses and individuals,” he said.
“That’s five times the disaster and challenge we’re still dealing with in Fort McMurray.
To put this in perspective, $55 billion is greater than the entire BC budget for the current year,” Forgeron told attendees.
And a 2016 report by Conference Board of Canada – commissioned by IBC – noted that the long-term consequences of a major earthquake on key macroeconomic performance indicators would be “devastating,” including cutting economic growth in half, producing cumulative real GDP losses of almost $100 billion and leading to an $87 billion hit to the treasury for the federal government alone.
“Historically, the thinking was that regardless of what happened to your home it could always be rebuilt. We now know that this is not always the case,” Forgeron said.
In New Zealand, the forces generated by the Christchurch earthquake were so great that liquefaction resulted in some 10,000 homes needing to be demolished, he noted.
“Liquefaction would likely be a significant issue here as well because we know that the soil in the City of Richmond, for example, is similar to what you find in Christchurch,” he added.
“Research clearly shows that it’s not cost pressures that compel people to decline quake insurance; it’s risk perception. Everyone knows there will be a major quake one day – they just don’t think it will happen in their lifetime,” Forgeron said.
One way to enhance awareness is by investing “more in risk awareness so people have a better understanding of the science and the probabilities. So they can make smarter choices for their own futures,” he recommended.
“We need to have the discipline and the rigour to ask ourselves today: How would we handle the strain and potential contagion of financial failure that could be caused by a major earthquake?” Forgeron asked.
“When it comes to earthquake risk, we can’t afford to make the mistake of wishful thinking. We can’t afford to be complacent. There is a role for each of us to play – not simply governments alone,” he emphasized.
“Ottawa and the provinces have made significant strides to get disaster preparedness as a key outcome, rather than simply a focus on our disaster response. Getting ready for the physical challenge is one step,” said Forgeron.”
“Together, we must also be better prepared for what comes after. We must think beyond the immediate aftermath,” he said.
“No matter the disaster – flood, fire or earthquake – we must be proactive in planning for how we will protect our economy so that we can rebuild as quickly as possible,” Forgeron added.