Earthquakes: Planning for an unpredictable risk

The public’s perception of earthquake risks understandably differs depending on where they live and how frequently noticeable earthquakes occur there — if ever. Earthquakes are actually happening constantly; there are hundreds around the world every year. Of course, the vast majority are so small they are undetectable by the average person and have no impact on their lives.............

But we are reminded regularly of the monumental devastation a major earthquake can cause. The 7.2 quake that hit Haiti in August of 2021 was last year’s most catastrophic quake, with thousands of fatalities and injuries, and massive property and infrastructure damage that can probably never be fully assessed.

While the U.S. has recently been spared the kind of historic losses caused by earthquakes some nations have had to endure, it has certainly felt the destructive power of these events. Many will remember the 1994 event in Northridge, California. That 6.7 magnitude quake, which caused 57 fatalities, thousands of injuries and widespread damage costing at least $20 billion,¹ was the last major quake in the mainland U.S.² But you only need look back five years earlier for another example: the 1989 Loma Prieta earthquake that hit the San Francisco Bay area, resulting in 67 deaths and over $5 billion in property damage.³

Both the Northridge and Loma Prieta (a 6.9) quakes were very strong, but still under magnitudes rated as “Major” (7.0 to 7.9) and “Great” (8.0 and above) on the Richter scale.⁴ That shows that an earthquake does not have to make its mark in the record books to have calamitous effects. Population density and a heavy concentration of buildings and infrastructure can make lower-magnitude quakes dangerous.

Going back to the mid-twentieth century, the largest recorded magnitude earthquake in U.S. history — a massive 9.2 quake — hit Alaska’s Prince William Sound in 1964. The event resulted in a tsunami and caused over 139 deaths and over $2.3 billion in damage when measured in today’s dollars.⁵ As tragic as that is, one can only imagine how much larger those dire statistics would have been had a 9.2 event occurred in a more populous area.

Where are earthquakes likely to occur and can we forecast them?

The west coast, and California in particular, is where the scientific community has long suggested the next historic-level earthquake is likely to occur in the U.S., largely due to observations of the San Andreas Fault, which runs through much of the state. However, the U.S. Geological Survey (USGS) tells us we can’t truly predict earthquakes. The Earth’s tectonic plates are like a massive, constantly shifting puzzle. Looking at their history, geologists can make long-term projections, but not true forecasts as experts can for a storm.

Case in point: Just last month, a swarm (yes, that’s the term used) of more than 50 earthquakes struck near the Oregon coast in just 24 hours. To a layman, that might suggest impending doom – the precursor of the so-called “Big One.” But even though the magnitude of some of those quakes was as high as 5.8, the scientific consensus was either comforting or discomforting (depending on your outlook) in that no direct correlation could be made from this series of quakes to potential future events.

There are three prominent global earthquake zones, but the USGS reminds us earthquakes can happen anywhere and without warning.⁶ Projections make it natural to focus on regions where earthquakes have been more common in recent history, but all governments, community organizations and businesses should have an Emergency Response Plan (ERP) for earthquakes. While nothing can contain or control a natural earthquake, a thorough ERP can provide steps that can help mitigate impacts and save lives.

For businesses, company leadership should consult with local authorities on emergency planning, as well as review resources made available by national government organizations, including:

• U.S. Geological Survey
• Occupational Safety and Health Administration
• Federal Emergency Management Agency

Many U.S. government earthquake resources are also coalesced on ready.gov/earthquakes.

Man-made earthquakes: A risk we can manage

Because many earthquakes have begun under the ocean, creating more damage from resulting tsunamis than immediate surface-level destruction, people sometimes refer to “underwater earthquakes,” but these — like most naturally occurring earthquakes — are tectonic or volcanic in origin. (Volcanic earthquakes can be either volcanic-tectonic quakes resulting from a fault near a volcano, or long-period quakes produced by vibrations caused by the movement of magma or other fluids within a volcano.⁷)

But human activity can create earthquakes as well, and while dwarfed by the number of natural earthquakes, man-made quakes are more frequent than you might think. In 2017, a database devoted to these events showed 730 human-triggered quakes over 150 years.⁸ Man-made earthquakes can be caused by a number of common industrial activities, including but not limited to:

• Fracking
• Drilling
• Mining
• Construction of water reservoirs and wastewater disposals

In 2016, the USGS released a report showing seven million Americans, mostly in the central and eastern U.S., at risk from induced tremors.⁹ It is not always easy to connect human activities to earthquakes when spatial and temporal scales are so large. And events can happen far away from where the human activity took place and/or occur years after that activity.

There is also a distinction made by some experts between human-induced quakes (where the event would not have happened without human activity) and human-triggered events (when a rupture on a pre-existing fault is simply advanced by humans, but the earthquake would have most likely happened without human action at some point). This distinction can lead to debate over the level of human responsibility, but connections are not hard to find.

Let’s look at just one state, Oklahoma, as an example. A Columbia University study linked a 5.6 magnitude earthquake in Oklahoma in 2011 to gas extraction work.¹⁰ A USGS report stated wastewater disposal likely induced a 5.1 quake in the state in February 2016.¹¹ And though not stating a definitive cause, the USGS also mentioned impacts of human activity in its summary of a 5.8 quake that struck the state just a few months later in 2016, noting, “…we do know that many earthquakes in Oklahoma have been triggered by wastewater fluid injection.”¹²

Globally, the largest earthquake in terms of magnitude that may be attributed — at least in part — to human activity is the 7.9 quake in Sichuan, China in 2008 where nearly 90,000 lives were lost. Studies from different scientists around the world have suggested the weight of the water in the man-made Zipingpu Dam may have triggered the event earlier than an inevitable earthquake (based on its location near a fault line) would have occurred naturally.¹³

Long term, global sustainability initiatives and potentially historic reductions in fossil fuel use could influence the need for mitigation strategies for man-made earthquakes. Though fracking is a controversial practice on many environmental fronts, the USGS suggests wastewater disposal is a more significant contributor to consequential man-made quakes.⁹ As things stand now, however, leaders in industries with potential seismic impacts need to bring in scientific, government and community advisors to take a full and responsible view of many factors, including but not limited to:

• Natural (tectonic) seismicity in the area where industrial activity might take place (that is to say, the general projections for probability of an event)
• Projected severity of regional seismicity
• Vulnerability of people, property and objects to an earthquake of a given magnitude
• Potential monetary losses from an earthquake event
• Added risk estimation for specific man-made factors influencing seismic risk, including but not limited to:
  • Fracking sites
  • Wastewater deposits
  • Gas-sequestration sites
  • Dams and reservoirs
  • Large construction sites (e.g., tunnels)
  • Mining sites

Site risk assessments are essential, not only in deciding whether a project should go forward, but in informing site location, project duration and protection mechanisms to reduce exposures where possible. Risk mitigation (e.g., building retrofitting) and insurance needs also need to be at the forefront of planning.

Business leaders should also consult with their insurance provider or broker to ensure they know what is and what is not covered in the event of an earthquake. This discussion should not be limited to property coverage, as an earthquake may impact workers’ compensation claims, supply chains, liability claims and much more. Companies may also find that some targeted, specialty insurance programs may be able to offer additional protection against potential losses.

As a helpful overview on considerations for an earthquake Emergency Response Plan, we hope you will read these articles:

Earthquake mitigation and preparedness demands a multi-faceted approach

An earthquake has struck. It’s time to act.

Seven steps to help your business recover from an earthquake

The guidance in this article was provided by the Zurich Resilience Solutions (ZRS) Risk Engineering team.

1. “1994 Northridge earthquake.” History.com. 2 December 2009; updated 21 August 2018.
2. “U.S. Earthquake History.” Insurance Information Institute. Accessed 17 December 2021.
3. “San Francisco Earthquake of 1989.” History.com. 18 December 2009; updated 11 September 2018.
4. Rafferty, John P. “Richter scale.” Encyclopedia Britannica. 8 May 2020.
5. “On This Day: Great Alaska Earthquake and Tsunami.” National Centers for Environmental Information. 28 March 2017; updated 15 June 2021.
6. “Where do earthquakes occur?” U.S. Geological Survey. Accessed 17 December 2021.
7. “Volcanic Earthquakes.” Pacific Northwest Seismic Network. Accessed 20 December 2021.
8. Shivni, Rashmi. “Human activity can trigger earthquakes, but how many? This number might surprise you.” PBS NewsHour. 6 October 2017.
9. “For the first time, new USGS maps identify the potential for ground shaking from both human-induced and natural earthquakes in 2016.” U.S. Geological Survey. 28 March 2016.
10. Schultz, Colin. “Oklahoma’s Biggest-Ever Earthquake Was Likely Man-Made.” Smithsonian. 27 March 2013.
11. “Wastewater Disposal Likely Induced February 2016 Magnitude 5.1 Oklahoma Earthquake.” U.S. Geological Survey. 24 October 2016.
12. “Magnitude 5.8 Earthquake in Oklahoma.” U.S. Geological Survey. 3 September 2016.
13. LaFraniere, Sharon. “Possible Link Between Dam and China Quake.” The New York Times. 5 February 2009.

The information in this publication was compiled from sources believed to be reliable for informational purposes only. All sample policies and procedures herein should serve as a guideline, which you can use to create your own policies and procedures. We trust that you will customize these samples to reflect your own operations and believe that these samples may serve as a helpful platform for this endeavor. Any and all information contained herein is not intended to constitute advice (particularly not legal advice). Accordingly, persons requiring advice should consult independent advisors when developing programs and policies. We do not guarantee the accuracy of this information or any results and further assume no liability in connection with this publication and sample policies and procedures, including any information, methods or safety suggestions contained herein. We undertake no obligation to publicly update or revise any of this information, whether to reflect new information, future developments, events or circumstances or otherwise. Moreover, Zurich reminds you that this cannot be assumed to contain every acceptable safety and compliance procedure or that additional procedures might not be appropriate under the circumstances. The subject matter of this publication is not tied to any specific insurance product nor will adopting these policies and procedures ensure coverage under any insurance policy.