Rainy Days? How Zoos Can Challenge Bad Weather & Win

A mother begins packing drinks into a bag for her toddler son and school-aged daughter.  They have an outing planned today.  Spring vacation has just begun, and the family is planning a trip to a Zoological Park. She turns on the television to watch the local news only to discover that a cold front has started its descent into the city where the park is located. Temperatures will continue to drop steadily in the next several hours making any outdoor activities unpleasant, especially with a toddler.   The mother abandons her plans to head to the zoo, and instead, the family makes a trip to the local children’s museum.  This scenario describes millions of families in thousands of cities on numerous days throughout the year.  On fair sunshiny days they head outdoors to educational venues like zoos.  For days that are less than pleasant, choices are made to stay indoors.

Zoological Parks rely heavily on weather conditions, the ups and downs of a forecast are critical components of day-to-day operational decisions and financial outcomes.  Beyond the good weather/bad weather scenario, the steady increase of unusual weather events has become detrimental to operations and meeting budgeted goals.  Believing that these weather events must be endured with little hope of finding a stopgap is a common misconception.  Mitigating the financial impact of current climate and weather conditions is possible by adopting a weather risk management plan.

Weather risk management plans are actions taken to protect against potential losses (caused by a shortfall in revenue, an increase in expenses, or both) due to adverse weather.  When creating a weather risk management plan one solution is to use weather insurance.  Negative weather events or patterns can be mitigated by insuring multiple perils such as:  excessive rainfall, seasonal weather, e.g. temperature highs and lows, wind, lightning, or even cancellation.  Further, weather insurance can be tailored to a client’s needs, thus solidifying a zoological park’s plan to help to reduce unnecessary financial losses and stabilize income that fluctuates dramatically when adverse weather conditions strike.

ZOO’s Weather Risk Management Plan

To introduce the conceptual idea of weather risk management planning, a factual account of an unnamed zoological park referred to simply as ZOO is presented. Data sourced from the park’s records indicated that weather significantly impacted daily attendance.  Temperature highs and lows had direct correlation with lower-levels of attendance, while moderate weather conditions correlated with high attendance levels.  This discovery demonstrated that non-optimal weather days, when conditions fall above or below specified temperatures, resulted in a significant decline in attendance (and a related reduction in concession sales).

ZOO is in the eastern portion of the United States and has a diverse animal population.  It is located near a major metropolis.  Attendees enjoy the many miles of walking trails and numerous exhibits

ZOO completed several capital improvements over the previous year.  As a result, the park needed to reach higher than average revenue levels to recover these expenditures during the following operational year.  As previously indicated, during non-optimal days there was a very notable reduction in attendance and concession spending.  To expand on this data, ZOO determined the approximate cost to the park in terms of lost revenue for each non-optimal day it encountered over the course of its seasonal cycle.  (This was determined through analysis of the average revenue per patron and attendance volumes lost to non-optimal days.)  A season with an abnormal increase of non-optimal days could adversely affect ZOO’s budgeted goal to cover the capital improvement project, which would result in future projects being delayed.

The advantages of using a variety of weather risk management products were introduced to ZOO through a team of meteorologists and weather index insurance professionals.  Through this relationship the park was able to identify seasonal and date specific risks and insure against them.  A baseline of non-optimal days ZOO could afford to experience over the course of its operating season was determined first.  In this particular case the park sought to avoid financial paralysis by using a product that compensated for a large number of non-optimal days, but still chose to bear some portion of risk during the season.  This allowed for income stabilization and diversion of loss previously associated with significant amounts of adverse weather.  Using this approach, ZOO was able to economically protect against major shortfalls in revenue that could result from an abnormally high number of non-optimal days during its operating season.

Additionally, ZOO’s data indicated that the park had its highest attendance days during several holiday weekends.  The most significant weather risk associated with these days was determined to be excessive precipitation in the early morning hours as patrons made the decision of whether or not to visit the park that day.  In this case, the park was unwilling to bear any of the risk associated with a rainy morning during these holiday weekends given the potential impact on attendance during those critical days.  With this approach ZOO was able to mitigate the impact of adverse weather during this critical holiday period.

Weather is unpredictable.  Now, more than ever that statement is true.  Most zoological parks are heavily dependent upon attendance to drive revenue and this reliance makes them extremely vulnerable to weather events and climate conditions.  Mitigating these impacts is the essence of what a weather risk management plan is designed to accomplish, and allows zoological parks to stop worrying about the impact of adverse weather on operational results.  Further, the specialized nature of weather risk management allows for customized solutions to be developed for unique weather risks associated with any location.  Product coverage can include the full operating season, a period as short as a few days, or a single event.  With a weather risk management plan in place, a zoological park would have an increased ability to reach annual budgeted goals even if unpredictable adverse weather caused attendance to drop. While weather impact cannot be completely avoided, through a well-designed and highly-specific plan the impact can be lessened and losses avoided.

 

 

 

 

 

 

 

Hurricane Harvey’s Henchmen (And 5 Reasons a Series of Hurricanes are Growing in the Atlantic)

Harvey in its aftermath set unprecedented record rainfalls and has left many parts of Houston in ruins.  The Estimates for the financial cost of Harvey range between $70 billion to $108 billion. The number of uninsured individuals among Houston’s 2.3 million is staggering.  Sadly, the death toll resulting from Harvey has risen to 70—one individual lost their life trying to restore power to the hurricane stricken region. Now, the U.S. braces itself as Irma stirs in the Atlantic.  Behind her is Jose and Katia.  Many are asking, “Why so many hurricanes with so much force in such a short time?”

 

5 Reasons Why a Series of Hurricanes Can Occur:

Seasonal Trends (Climatology): Now is the peak of hurricane season in the Atlantic.  Having three hurricanes at once and two of them category 4 is rare.  Being in the peak season doesn’t guarantee anything–but the normal situation this time of year is that the intertropical convergence zone (ITCZ), a band of thunderstorms around the equator that drifts north from summer to fall and south from winter to spring, has thunderstorm clusters break off and move northeast through the Atlantic. These organizing thunderstorm clusters combined with seasonally warm water and low wind shear (items two and three on our list) make this the easiest time to develop hurricanes in the Atlantic.  Recently, conditions have been even more favorable than normal for August and September.

Source: NOAA

Warm Water: This is the time of year with the warmest water in the North Atlantic.  The water is around 3ºC warmer than normal between the Lesser Antilles and Africa. The area that Irma first exploded into a major hurricane (red sections in the line below) was about 27ºC (yellow below). That water would have been 24ºC (light blue) if it were at its 30-year normal.  Typically, that average is not even warm enough to develop a hurricane at all.

The Gulf of Mexico, near the Bahamas, and the Caribbean Sea are closer to normal, but that’s about 28ºC to 30ºC in those areas (oranges).  Warm enough to support a major hurricane like Harvey…or Katia, which is in the Gulf of Mexico and could hit Mexico as a major hurricane. Irma is also moving fast enough to not mix a lot of cooler water to the surface, which is allowing Jose to intensify in Irma’s footsteps.

Source: NOAA

Low Wind Shear: Some predictions this past winter and spring had El Niño developing in fall, which would have led to stronger upper level winds across the Atlantic. This would have made a bigger difference in winds between the upper levels and the lower levels (wind shear) that makes it hard to maintain thunderstorms and organize a hurricane. This did not happen, so wind shear is less and hurricanes are easier to form.

Until early summer, jet streams cross the Atlantic producing widespread shear that prevent hurricane formation.   Later in summer, those jet streams move north, reducing wind shear, and allowing easier hurricane formation.  Wind shear is currently low across large parts of the tropical Atlantic (green areas below), which is also occurred when Harvey became a hurricane.

Source: UW-CIMSS/NESDIS

General Upward Motion: The Madden-Julian Oscillation (MJO) is a measure of thunderstorm location in the tropical Indian and West Pacific Oceans that has a typical 40 day cycle and eight phases that correspond to where the thunderstorms are most numerous.  Phases 1 and 2 support rising motion in the Atlantic, which makes it easier to sustain thunderstorms in the Atlantic and develop hurricanes. Phases 3, 4, 5, and 8 are fair, while phases 6 and 7 are hostile to rising motion. The MJO entered phase 1 in the middle of August, then moved strongly into phase 2 in the last week of August, and is currently in phase 4.

Source: Australian BOM

Lack of Dry Air: Earlier in the summer, dry air and Saharan dust were commonly brought across the Atlantic.  Thus, drying out thunderstorms that developed and collapsing any attempt to develop hurricanes. This is commonly persistent in quiet hurricane seasons. Currently, all the dry air and dust is in the eastern Atlantic (reds and yellows below).  The dry air and dust are now unable to reach Irma, Jose, and Katia.  Earlier, Irma did have to fight some dry air during its first couple of days, but she was able to get out of the dry air mass and explode into a major hurricane.

Source: UW-CIMSS/NOAA

 

Seasonal trends, water temperature, low wind shear, upward motion, and the lack of dry air and Saharan dust have created and cultivated the conditions for this succession of hurricanes.  The world is watching closely as Irma churns off the coast of Florida, Jose meanders through the Atlantic, and Katia’s eye is pointed towards the Gulf.