A recent Harris Poll conducted on behalf of the American Institute of CPAs (AICPA) highlights the financial gaps many Americans face when it comes to preparing for natural disasters. The survey, which included nearly 2,100 adults, revealed that almost one-third of respondents have not taken any financial steps to prepare for such events.
Despite a growing awareness of the risks posed by disasters, less than one-third of those surveyed reported taking even a single proactive step to safeguard their finances.
Survey Findings
The survey showed that 68% of respondents have taken some financial steps to prepare, a figure that aligns closely with the 66% who acknowledged that a natural disaster would have a major (29%) or moderate (37%) impact on their financial situation.
However, the most common step taken — reviewing and evaluating insurance needs to ensure adequate coverage — was reported by only 31% of respondents. Other preparedness actions included taking an inventory of assets and possessions for insurance purposes (30%) and creating or updating an estate plan or will (19%).
Among the nearly 300 business owners included in the survey, about two-thirds expressed concern over potential financial hardship resulting from natural disaster losses. Specifically, 31% of business owners said they were very concerned, and 33% were somewhat concerned.
Eva Simpson, CPA, CGMA, and AICPA vice president of Member Value, Tax & Advisory Services, noted that many people only recognize the importance of financial preparedness after a disaster strikes. “Disaster preparedness when it comes to finances can go a long way to mitigate the financial toll and help people and businesses recover,” Simpson said in a news release.
Recommendations for Individuals
The AICPA provided guidance on financial preparedness for individuals, recommending steps such as:
- Creating an emergency fund to cover immediate needs after a disaster.
- Reviewing insurance policies to ensure coverage is sufficient for potential risks.
- Protecting important financial documents by storing them securely and accessibly.
- Making or updating an estate plan to protect assets and ensure a clear plan for loved ones.
Recommendations for Businesses
For business owners, the AICPA suggested planning for both operational and financial disruptions that disasters can cause. Key steps include:
- Evaluating communication channels to ensure employees and stakeholders can stay informed.
- Planning for remote work to maintain operations during physical disruptions.
- Protecting critical data through secure backups and cybersecurity measures.
- Preparing for workspace disruptions, including identifying alternative locations if necessary.
The Importance of Preparedness
While natural disasters can have a profound emotional and financial impact, taking proactive steps before an event occurs can reduce the toll. “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.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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