Dealing with natural disasters: Prepare by taking these steps today

A string of recent natural disasters has increased awareness of the dangers, yet nearly one-third of Americans haven’t taken financial steps to prepare for a natural disaster, and less than one-third have taken any one specific action to prepare.

Those are among the findings from a recent Harris Poll conducted on behalf of the AICPA that surveyed nearly 2,100 adults.

“Many Americans don’t think about their finances when it comes to preparation for a natural disaster. However, financial needs become front and center after the destruction has already taken place,” Eva Simpson, CPA, CGMA, AICPA vice president–Member Value, Tax & Advisory Services, said in a news release. “Disaster preparedness when it comes to finances can go a long way to mitigate the financial toll and help people and businesses recover.”

Sixty-eight percent of survey respondents have taken some financial steps to prepare, in line with the 66% that said being affected by a natural disaster would have a major (29%) or moderate (37%) impact on their financial situation.

However, the leading action taken to prepare — evaluating insurance needs to assure adequate coverage — has been taken by just 31% of survey respondents. Thirty percent have taken inventory of assets and possessions for insurance purposes, and just 19% have created or updated an estate plan and/or will.

Among nearly 300 business owners included in the survey, about two-thirds said they were very (31%) or somewhat (33%) concerned about the possibility of financial hardship if their business experienced losses from a natural disaster.

The AICPA offered advice for individuals and businesses to prepare for the possibility of a natural disaster.

Individuals should consider:

• Creating an emergency fund;
• Reviewing their insurance policies;
• Protecting important financial documents; and
• Making an estate plan.
  

Businesses should consider:

• Evaluating communication channels;
• Planning for remote work;
• Protecting their data; and
• Preparing for physical workspace disruption.

“Preparing financially for a disaster is a challenging, but necessary, task for individuals, families, and business owners,” Simpson said. “Disasters can take a toll both emotionally and financially — taking these steps to prepare can provide peace of mind and help victims rebuild after a tragedy.”

AICPA RESOURCES

• Disasters and Financial Planning Guide
• Disaster tax relief efforts and milestones

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.