The world has become a riskier place for all types of companies than it was even just a few years ago, both here in the United States and globally.

The world has become a riskier place for all types of companies than it was even just a few years ago, both here in the United States and globally. Five of the world’s ten most costly natural disasters, indexed to current dollars, occurred in the United States, since 2004, and all were wind-related events.

While none of the 2006 hurricanes made landfall in the United States, catastrophe events in the United States were nonetheless at their sixth-highest level since 1997.

Nor was it quiet on the other side of the world, where more than two-dozen typhoons struck coastlines across Asia in 2006. Europe also has seen its share of wild weather. In January 2007, Windstorm Kyrill tore through several European countries, with wind gusts peaking at more than 120 mph.

Shared Interests

So what does this mean for those of us involved in the construction, maintenance or protection of buildings?

First and foremost, we need to move beyond viewing ourselves as vendors, contractors and service providers to our clients. Building products manufacturers, construction companies, contractors and insurers all have a shared interest in making sure clients’ needs and wishes are met. It is our duty, at every link in the chain, to deliver the best recommendations and solutions to keep clients’ buildings intact so their businesses remain operational. In the final accounting, property owners want to be assured of the integrity of their structures from all partners.

From a customer’s perspective, the consequences of damage to a facility can be much more costly than the physical damage itself. The real value, in many cases, lies inside the facility in the contents and operations the building is protecting. Whether it’s a manufacturing facility or an office, a compromised building can cause a chain of cascading events that can result in lost production, revenue and future sales - not to mention lost credibility in the eyes of an organization’s customers.

The bottom line is this: our shared clients - especially those in higher-risk geographies or high-hazard industries - rely on us to do our collective part to help them protect their facilities so they can rest assured knowing their buildings will remain intact, whether subjected to fire, earthquake, hurricane, flood or any other potentially damaging event.

A look at historical loss data for windstorms as well as at recent reports from the above-average 2004 and 2005 hurricane seasons in the United States, highlights some familiar themes.

According to the Roofing Industry Committee on Weather Issues (RICOWI), poor workmanship and improper materials and specifications were the primary causes of hurricane-related roof failures in Florida and on the Gulf Coast in 2004 during Hurricanes Charley and Ivan. RICOWI reported that nearly 95 percent of roof failures were caused by poor workmanship and substituted materials.

In a related study of hurricane damage caused by Hurricane Katrina in 2006, the Institute for Business and Home Safety (IBHS) reported that “most of the affected areas experienced gust wind speeds below those established in the American Society of Civil Engineers’ ASCE 7 Standard, which guides construction practices in high-wind-exposed areas.” IBHS noted that “most of the wind damage to structures built after 1995 could have been prevented had the jurisdictions adopted and actively enforced model building codes and high wind deem-to-comply documents available in the early 1990s.” IBHS further suggested the best approach to preventing property losses caused by such storms in the future is to, among other things, “require the adoption and enforcement of modern building codes and standards where they do not exist,” and to “require training for builders, subcontractors, architects, engineers and building officials on wind-resistant design and construction.”

That being said, the majority of building-related professionals are reputable, conscientious and hardworking people and have their clients’ best interests at heart. Additionally, it should be recognized that even the best-built roof can fail in certain conditions so there’s always room for improvement.

FM Global’s Perspective

FM Global is an engineering-driven insurance company that focuses solely on commercial and industrial property. As a “mutual” organization, the company is owned by its policyholders, who operate more than 220,000 facilities worldwide with an average insured value of $33 million per location.

Our policyholders share a belief that the majority of property loss is preventable. And while insurance serves a useful role in the event of a disruption, the impact often exceeds what any policy can provide in terms of indemnification. In other words, insurance can never fully compensate a company for subsequent lost sales, a loss of market share, out-of-work employees, lost management time or damaged corporate reputation.

As such, FM Global’s policyholders see the company as a partner that helps them understand both the hazards that can threaten their operations and make well-informed decisions about how to reduce their risk exposures. It’s also the reason FM Global invests heavily in research and continually provides them with the best available property loss prevention advice, based on the company’s more than 170 years of scientific research, loss experience and engineering.

Year after year, fire, natural hazards and mechanical and electrical equipment breakdown top the list of the major types of property loss at FM Global’s client facilities.

The company also finds that the severity of property threats to business is ever-changing and, in many cases, increasing as a result of globalization, advances in technology and new production processes. Building or acquiring facilities in areas where there is a greater frequency of natural disasters or substandard fire safety codes adds to the complications.

When it comes to roofs, perils such as fire, ponding of water and snow loading can cause damage and ultimately compromise the integrity of the building envelope. FM Global’s research and loss analysis continues to validate that the most frequent and often costliest roofing damage at FM Global-insured locations occurs during windstorms, but not necessarily due to high wind speed. Rather, it’s often due to inadequately secured roof materials and/or roofs that have deteriorated due to lack of maintenance-factors that, in many cases, are preventable by simply ensuring the level of quality the codes demand.

With more than 1,500 full-time property loss prevention engineers worldwide, most of FM Global’s windstorm efforts are directed toward helping clients improve inferior installations. Furthermore, the fix for exposed locations is generally a simple, better securement of the roofing materials.

From a property owner’s perspective, any increase in expense can be seen as an incremental investment compared to the financial impact and consequences of trying to recover from a loss. Such risk improvement can, in turn, often lead to better insurance terms and conditions for property owners.

When FM Global’s engineering recommendations (contained in its Property Loss Prevention Data Sheets) are implemented and followed properly along with the appropriate selection and installation of FM Approved materials, FM Global clients have found the solutions to be effective in protecting their business operations.

For example, FM Global clients who had facilities in the path of Hurricane Katrina and followed the company’s recommendations reduced their average dollar loss by 85 percent. Specifically, clients who followed these engineering guidelines had losses of 34 cents per every $100 of their total insured value, while clients with recommendations yet to complete had losses of $2.30 per every $100 of their total insured value.

Those recommendations were inexpensive too - $7,400 in improvements per facility to avert an average of $1.5 million in property damage per location.

Statistics from Hurricane Rita showed similar results. Clients who followed FM Global’s recommendations had losses of 12 cents per every $100 of their total insured value, while clients with recommendations yet to complete had losses of 47 cents per every $100 of their total insured value.

In both hurricanes, the majority of damage that did occur to FM Global clients was the result of construction weaknesses that had been identified, but had not been addressed, and occurred at wind levels below 100 mph.

While FM Global is pleased with the effectiveness of its engineering recommendations in these hurricanes, the property losses the company did see and analyze produced evidence of a need to further enhance some of its engineering guidelines.

Moving Forward

FM Global believes building products manufacturers, construction companies, contractors and insurers all have a shared interest in ensuring the integrity of our clients’ facilities. We should be aware that property risks are ever-changing and may increase in both intensity and frequency, placing our clients’ operations at risk. We cannot rest on our laurels. Property owners are counting on us.

Still, even with the best design, products, construction and maintenance, all related parties have to keep talking with each other and working together to serve effectively the interests of the property owners who count on us.

At times we all are not always going to be in agreement, but the goal must be kept in mind. What is important is that we all are openly communicating, seeking to understand one another and working toward that common goal of making sure our clients’ buildings perform well against all exposures.

It is FM Global’s hope that all parties - architects, designers, consultants, installation contractors, manufacturers, engineering consultants and insurers - work together to ensure our respective clients receive quality building installation or maintenance that meets or exceeds code requirements.

As FM Global looks to do its part:

• The company will continue to update and enhance its engineering recommendations based on the same three factors that have guided us for nearly two centuries.

1. Scientifically based research and product testing.

2. Loss experience.

3. Engineering judgment in the best interests of the company’s client/owners.

• FM Global’s business unit FM Approvals will continue to test and certify those building materials to meet the most rigorous loss prevention standards so architects, consulting engineers, plant managers and product buyers can make well-informed decisions about which products will best reduce property risks.

• FM Approvals recently made its Web-based roofing tool RoofNav (, previously offered by subscription only, available free of charge. RoofNav takes the guesswork out of configuring an FM Approved roof and provides users with the most up-to-date details on FM Approved roofing products and assemblies.

Processes have been put in place to ensure the roofing industry gets advance notice of significant changes to our property loss prevention data sheets.

• The company continues to welcome and accept invitations to speak at roofing-related conferences and provide roofing associations with training sessions that serve roofing professionals’ needs.

• Members of FM Global’s staff will continue participating on numerous industry councils, advisory boards and committees.

• The company encourages individual and collective feedback on our engineering guidelines and incorporates those suggestions when doing so serves the best interests of our client/owners. If you’d like to be notified of industry-related updates from FM Global or have comments, suggestions or opinions to share, please e-mail

Ultimately, property owners want to feel confident that their facilities are built soundly, with robust materials that meet or exceed code and are well protected. When they do, we all have done the right thing.

Property owners also want to rest assured that, should the worst happen, their insurer will be there to pay their claim promptly and fairly.

And those of us who understand quality matters, and is in the best interests of our shared clients, will enjoy a competitive advantage.