Some companies may think that if a hurricane hasn’t hit their building before, it’s unlikely that it will hit it now.

Other companies might be willing to just take their chances and “roll the dice.” And if you’re a business in Rhode Island – where hurricanes are uncommon – the “rationalizing” of a potential problem can seem easier, said FM Global spokesman Steve Zenofsky.

“However, do you have critical suppliers in regions that are exposed to natural catastrophes?” Zenofsky said. “And, if so, how well prepared are those suppliers?”

They’re not so well prepared, according to FM Global’s 2008 Natural Disaster Business Risk Study, released late last month. It’s the first year the Johnston-based commercial property insurer has produced such a study.

Rhode Island companies’ indirect exposure wasn’t calculated as part the study, but the supply chain risks could be inferred. FM Global surveyed the senior financial executives – finance director, CFO, treasurer, etc. – of 100 companies. Those polled had more than $1 billion in annual revenue and were multinational.

“Basically, the research says three things: the largest companies throughout North America are highly exposed to natural catastrophes, there is a high level of under-preparedness and a low level of concern,” Zenofsky said.

In a statement accompanying the study results, FM Global Executive Vice President Ruud Bosman said the results were surprising, “especially given that, in the first half of 2008, there were about 400 natural catastrophes worldwide with overall losses expected to top $50 billion.”

In answering the survey, 96 percent of the companies said they had operations in locations exposed to some sort of natural disaster. And FM Global took that a step further, breaking natural disasters into three categories: earthquakes, floods and hurricanes and typhoons. Those are the three “costliest” types of disasters, Zenofsky said.

For hurricanes, 80 percent of those polled had locations that were exposed to the storms. And 48 percent of those companies said they weren’t well prepared for such storms. “And what’s interesting is that the level of under-preparedness increases – so even more are under-prepared for a flood and even more are under-prepared for an earthquake,” Zenofsky said.

Why wouldn’t they be concerned?

There could be extremes, Zenofsky said, like a company that has a warehouse that’s full of office paper, where “there aren’t a lot of dollars flowing in and out of that facility. So they might not be overly concerned if an earthquake leveled that building.” But because the survey was random – the locations of the companies weren’t taken into account when they were chosen by the firm Opinion Research Corp. – it’s unlikely that such extremes would skew the results, he added.

“What we believe is that either companies don’t understand their level of exposure or may have a false sense of security,” Zenofsky said.

John Buffum, owner of Warwick importer John F. Allen & Son Inc., said many of the stones and beads that his company imports from around the world originate from cosmopolitan areas with a lesser possibility of disruption from a natural disaster.

“Most of our supply lines are fairly established,” he said. “So we haven’t – haven’t yet – had any real interruptions.”

Since 1889, the company has been importing from around the world to Rhode Island.

“It is something that we’re aware of and it’s one of the things that we ask whenever we talk to a new vendor. It’s something that businesses should be thinking about,” he said, adding that “more and more businesses are sourcing around the world.”

Zenofsky agreed.

Even just one product – as small as a washer – being held up in transit could “affect your market share, your ability to be competitive and, potentially, even your reputation,” he said.

For companies that want to do something about natural disasters, there are five recommendations that FM Global offers: take valuables out of the basement or off ground level; double up on plywood over windows; make sure the roof – especially the corners – is properly secured, move anything away from a building that could be blown into the building and look at your supply chain to see who is susceptible, Zenofsky said.

“We have seen time and time again that the majority of all property damage and related business interruption is preventable,” he said. •