A year ago Hurricane Sandy hit the USA west coast leaving behind great economic damage from which local communities still haven't recovered. In South America, the big earthquake that woke up Chileans in February 2010 left geographical scars, and economic losses. In Japan, Fukushima is still an unsolved problem. These catastrophes and many others affected millions of people around the world.In addition to hurricanes and earthquakes, cities and towns can be affected by floods, local severe storms, tornadoes, droughts, volcanoes, and blizzards. A recent study conducted by Euromonitor International shows how natural disasters pose a great threat to local and national economies, especially in developing countries. Infrastructure is disrupted, supply chains are halted, and agriculture suffers as well as finances, having a negative impact over the domestic and even global growth.In spite of the potential threats posed by climate change and the latent risk in seismic regions, it is striking a poorly the private sector seems to be ready not only to react but to prevent, in order to guarantee the continuity and sustainability of operations, in most of cases.Natural disasters and risk managementJorge Ayala, professor of Strategic Management at the EGAE in the University of Puerto Rico, argues that "the main goal of risk management is to determine strategies and the necessary controls to prevent or minimize any harm to the operations".In this sense, "risk management is increasingly important to organizations, most firms already have a risk management department", says David L. Kelly, UM professor of environmental economics.Certainly, since the financial crisis of 2008 companies have tried to improve control over the financial risk, but there is a lot to do in terms of preventing a reacting to natural disasters. Businessweek reports that in USA around one in four businesses fail after a natural catastrophe. In Chile, Luis Cifuentes, director of the Center of Research and Management of Natural Disasters at the University of Chile, points out that "the earthquake of 2010 cost 20 or 30 billion dollars to the economy, divided among the public and the private sector. However, insurances covered only 4 billion dollars".Ayala says that "businesses must identify risks and establish priorities, as very important actions when it comes to risk management. Companies must assess their risks using the formula probability/impact. Each risk will be equated to a level of potential damage and a probability of occurrence".Kelly explains how risk assessment can vary. Royal Caribbean, a tourism agency offering cruise lines, has already implemented some actions in order to protect its ships and other resources from hurricanes, but still finds difficulty when assessing the risk of a potential contagion in a cruise, or an engine failure".It is surprising that most of Latin American countries that have been so harshly affected by natural disasters are still far from reaching the proper awareness about these risks. Cifuentes argues that building regulations in Chile have improved to the highest levels,but other areas still lack any control. For instance, "there is no norm to secure continuity in telecommunications during a disaster or in the immediate aftermath".To small and medium enterprises, prevention can be decisive in securing sustainability. There are strategies that help to transfer the risk and mitigate the potential impact. Sometimes simple actions can reduce risk, such as keeping offline backups of information, in case the company cannot access the information stored in the cloud after a disaster. Ayala explains that "when the company has evaluated the availability of resources, it must consider the strategy to respond in a contingency situation. SMEs usually follow only established regulation, without any further creativity in solutions that could make the difference for the business".Kelly argues that companies can use data and stats to evaluate the ratio between probability and impact. He suggests it is simpler to protect the company from events with better known consequences, than it is to protect it from unusual or unexpected occurrences. "Hurricanes are fairly easy to control, in the sense that we know the potential risks and probabilities, but there are other less known threats difficult to study or document. BP had little idea about the dramatic trajectory of the oil spilling accident in the Gulf".It is interesting that management research inside academia hasn't yet tackle this topic, Cifuentes says. "I don't know of any line of research focusing on this subject in Chile. At the government level, housing ministry is commissioning a group with a study about catastrophic risks from earthquake in this area, but it is still at a first stage".On the other hand, one of Kelly's investigation lines aims to determine variables of probability and impact rising from less known risks, in order to find ways to reduce it. For example, a company can buy stocks of an oil company and an airline, "this way, if fuel's prices rise, the company can compensate the losses of the airline's stocks with the rise of the oil company's stocks".