#United States #Washington #AICPA #Natural Disasters #Financial Preparedness

Understanding the Financial Preparedness Gap in America

A recent survey by The Harris Poll on behalf of the American Institute of CPAs (AICPA) uncovers concerning trends in financial preparedness among Americans regarding natural disasters. Surprisingly, approximately 32% of Americans report that they have not taken any financial steps to prepare for potential natural disasters. This statistic raises a flag, as two-thirds of respondents acknowledged that facing a natural disaster could severely affect their financial stability. In fact, 29% of participants indicated that they would experience a major impact, while 37% expressed concerns about a moderate financial blow.

A Lack of Awareness

Eva Simpson, CPA and AICPA vice president of member value, tax advisory services, noted, “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.” This highlights a critical gap in awareness around the potential financial repercussions of natural disasters, suggesting that many individuals underestimate the importance of proactive planning.

Current Preparedness Strategies

Among those who have made some preparations, the most frequently reported actions include:
1. Evaluating insurance needs - 31% of respondents have taken this step to ensure adequate coverage.
2. Taking inventory of assets - 30% noted they have inventoried belongings for insurance purposes.

However, only 19% have made efforts to create or update their estate plans. This indicates that while some fundamental preparations are being recognized, significant gaps persist in comprehensive disaster readiness.

Concerns Among Business Owners

The survey also revealed that 63% of business owners are either very or somewhat concerned about financial hardships stemming from natural disasters. The top three worries among these entrepreneurs include:

• - Loss of revenue due to business closure or disruption: 33% expressed this concern.
• - Loss of customers or contracts: Cited by 29% of respondents.
• - Damage to property, equipment, or inventory: 26% reported these fears.

These statistics underscore the potential strain that disasters can have not just on individuals, but on the broader economy as well.

Recommendations for Individual Financial Preparedness

To mitigate financial risks associated with potential disasters, individuals can take several proactive measures:

1. Create an Emergency Fund

Setting up a dedicated emergency fund will ensure that you have resources readily available for post-disaster repairs. It’s crucial to keep some cash accessible given that ATMs and banks may be offline after a disaster.

2. Review Your Insurance Policies

Start by assessing current insurance policies—homeowner’s, renter’s, and auto insurance. Consulting with an insurance agent can help clarify any gaps in coverage. Maintaining a documented inventory of your possessions through photos and videos can facilitate insurance claims down the line.

3. Protect Important Financial Documents

Safeguard vital documents, such as identification records, insurance policies, property deeds, and wills. Keeping these in a safe deposit box or a fireproof safe is advised to ensure their protection during a disaster.

4. Establish an Estate Plan

Develop an estate plan that includes a will, durable power of attorney, and health care proxies. Legal aid clinics may offer free or reduced-cost help regarding estate planning.

Advice for Business Owners

To ensure continuity and resilience in the face of potential disasters, business owners should consider the following:

1. Establish Communication Channels

Setting up varied communication methods prior to a disaster can facilitate employee coordination. Utilizing cloud-based systems and mass notification platforms is vital.

2. Plan for Remote Work

Prepare for unforeseen scenarios by ensuring that your business systems are accessible for remote work. Regularly testing the systems helps ensure readiness.

3. Protect Your Data

Investing in data backup systems linked to cloud storage can safeguard sensitive information from being lost during a disaster. Establish suitable cybersecurity measures and staff training as part of your preparedness plan.

4. Prepare for Physical Workspace Disruptions

Evaluate the disaster risks of your business locations and develop plans for relocations if necessary. Providing emergency supplies like chargers and first aid kits can also enhance readiness.

Conclusion

Financial preparedness for natural disasters is not just a personal responsibility but a community necessity. As Eva Simpson concludes, “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.” The results of this survey indicate an urgent need for increased education and resources aimed at improving financial preparedness among both individuals and business owners in the face of climate change and natural disasters.

About the Survey

This survey was conducted between June 13 - 17, 2025, involving 2,093 adults aged 18 and older, including 284 who currently own a business. With a sampling precision of +/- 2.5 percentage points and a 95% confidence level, the results underscore a significant trend that warrants urgent attention.