Risk Assessment
Saturday 3 November 2012 - Filed under Uncategorized
Risk assessment, how the fuck does it work?
More than 100 business owners jammed into a standing-room-only meeting Thursday afternoon in the Red Hook neighborhood of Brooklyn to hear New York City officials describe the relief assistance available to entrepreneurs who saw their restaurants, stores, warehouses and other businesses devastated this week by Sandy’s flooding.
Over and over, city representatives repeated one word: loans. The U.S. Small Business Administration offers low-interest disaster loans of up to $2 million over terms as long as 30 years. The loans are financed directly by the government and capped at a 4% interest rate.
For a business loan, it’s a remarkably good deal, and it’s one of the federal government’s main tools for helping small businesses survive crippling disasters. Red Hook’s local congresswoman, Nydia Velazquez, repeatedly urged attendees to look hard at the SBA program. New York City is also offering bridge loans of up to $10,000 for area businesses that need working capital fast.
But the assembled crowd reacted to that word — loan — like it was a four-letter epithet.
“Most of us are deeply overextended as it is,” said Monica Byrne, the co-owner of local restaurant Home/Made. “We’re all shut down. We have staff we can’t pay. We really need some support that’s not about loans.”
But why are these folks so hard up for non-loan cash?
It will be an uphill fight to get any of it from their insurers.
“No one in this room has flood insurance,” said Jackie Summers, gesturing at his fellow business owners.
That’s not for lack of trying. Red Hook, an industrial waterfront community, sits squarely in the kind of high-risk zone insurers won’t touch.
Ikhmies said he carries fire, theft, liability and other coverage on his 13-year-old printing business. But when it came to flood insurance, the only coverage he could find had sky-high premiums and a too-small coverage cap.
“They only went up to half a million,” he said. “The equipment cost $4 million, $5 million. What good would half a million do if things got damaged?”
So these people, unlucky as they are, willingly chose to open a business in an area that insurance companies, companies which are in business and survive based on their ability to assess risk, wouldn’t insure because the flood risk was too great and that it would not be financially feasible, yet they somehow expect to be bailed out anyways? Don’t get me wrong, I sympathize with their plight. I know exactly what it is to survive a storm. But when you make purposeful choices, you must pay the consequences which stem from those choices. If you can’t get insurance because the risk has been assessed to be too high, yet you willingly open shop anyways, you don’t deserve a goddamn dime to rebuild. You made the choice knowing full well that there was a greater risk than normal of sustaining heavy damage from flooding. Now it’s time to live with that choice.
Fuck off.
2012-11-03 » madlibertarianguy