The Business Of Disaster
The rippling effects of world catastrophes on business markets
The detrimental effects of natural disasters and devastating world events on businesses are well known yet not always self-evident. With that in mind, we take an in-depth look into some of the unexpected impacts of the recent catastrophes on the global business markets and commodities.
Gun Stocks Spike Following Mass Shootings
In the immediate aftermath of the devastating Las Vegas shooting two days ago that killed 58 and wounded at least 518 people, firearm-related stocks started to rise even before the final number of casualties was tallied. In fact, this has become a grim yet predictable trend in the stock market following mass shootings in the U.S. for reasons both political and emotional. The same phenomenon occurred after the Pulse nightclub shooting in Orlando last summer as well as during Obama’s years in office. Driven by the predictions of more stringent gun controls as well as heightened fears of terrorism and crime, traders often speculate that arms sales will spike.
Uber Surge In The Aftermath Of A Terrorist Attack
Following the deadly terrorist attacks in London this June, while some black cabs were giving free rides to get people home safe, customers of the ride sharing service, Uber, still had to pay a surge price for their rides. The ‘surge pricing’ feature automatically kicks in when demand is greater than the number of cars available hence, the app service did not independently make exceptions in the interests of human welfare. As the new era of technological advancements such as Artificial Intelligence and chatbots continue to proliferate, such events remind us that the human touch is still something we are unable to replicate and replace entirely.
Global Warming Threatens Insurers
Just like any other business, insurance companies price their services to make a reasonable profit. However, as global warming advances, erratic weather events and catastrophes are not only threatening the livelihoods of millions but also the ability of the global insurance industry to manage society’s risk. In the last two months alone, floods have killed thousands of people across India, southern Nepal and northern Bangladesh. Around 40 million people have seen their homes, businesses or crops destroyed. In an analysis by a coalition of the world’s leading insurers, it was concluded that the ‘protection gap’ – the difference between the costs of natural disasters and the amount insured – has quadrupled since the 1980s. Consequently, insurers have been forced to pass on this burgeoning risk to consumers by increasing local premiums.