If you’ve ever driven down the 405 freeway in L.A.’s San Fernando Valley, you have passed by the sprawling 95-acre Anheuser-Busch brewery where, since 1954, some of the world’s most famous beer brands such as Budweiser, Bud Light and Michelob, and more recent labels like Bud Ice, Kirin Ichiban and Chelada are made.

That Van Nuys facility today is a testament to the financial benefits of seismic resilience.

Forty-eight years ago, the bustling brewery — producing beer for California, Hawaii, Nevada, Arizona and 40 export markets — suffered extensive damage in the 6.5-magnitude Sylmar earthquake and had to cease operations for a prolonged period of time as it rebuilt the facility.

During that 1971 shutdown, competitors were able to make large gains into the Anheuser-Busch market share, resulting in significant financial loss that motivated the brewery to place a greater value on seismic design, the California Seismic Safety Commission wrote in a 1999 case study. [1] Hard-hit by the reality of being unprepared in the Sylmar quake, the self-proclaimed “King of Beers” upgraded the brewery with earthquake retrofits and new construction designed to the latest seismic standards.

The money invested in those upgrades paid off big time when the Northridge earthquake struck that same region 23 years later.

How can you protect your business?

Listed below are four easy steps you can take to fortify operations and protect your bottom line. These are strategies that can and should be taken by any business, large or small.

1. Identify your business’ vulnerabilities

Anheuser-Busch spent $1.2 million in seismic retrofits and other upgrades — an expense that ultimately saved the business more than $1.1 billion in combined property and business loss when the 1994 Northridge quake hit, state and federal officials reported.

Even though the brewery is located just a few miles from the epicenter of that devastating 6.7-magnitude temblor, none of the retrofitted structures in the compound were damaged. The brewery was quickly returned to nearly full operations following minor cleanup and repairs, according to the Federal Emergency Management Agency. [2]

“Anheuser-Busch estimated that their facility would have suffered a direct property loss of about $350 million from the Northridge earthquake had there been no seismic strengthening,” the Seismic Safety Commission concluded. “This averted damage is more than 30 times the actual cost of the brewery’s loss control program.” [3]

Projected business losses would have been more than $750 million had the seismic retrofits not taken place, the commission reported. That loss would have been more than 60 times the cost of the upgrades.

“We never take shortcuts,” one of the company values asserts. “Integrity, hard work, quality, and responsibility are key to building our company.” [4]

Businesses are extremely vulnerable to the risks presented by earthquakes — and this in turn threatens the life, livelihood and well-being of the communities those businesses serve.  This is true for businesses that lease space in a commercial building, as well as those which own and occupy their buildings. In either case, businesses may experience the following:

  • Loss of cash flow: A disruption in business can mean a loss of revenue, putting a heavy strain on a business owner’s ability to pay ongoing expenses.
  • Loss of equipment/inventory: Damage to equipment and inventory can stifle or halt production. This adds another burden to the initial costs of replacing what was lost.
  • Loss of workforce: Operational delays caused by earthquake damage may result in employees resigning to take jobs elsewhere. This may in turn lead to lowered production once operations resume.
  • Liability: Business owners may be held liable for losses incurred by employees or customers, when negligence is a factor.
  • Environmental concerns: Many businesses manage toxic substances that may pose hazards if exposed to the environment during an earthquake. Businesses are liable for cleanup costs associated with spills.
  • Loss of market-share to competitors: If business operations are slowed down or halted after an earthquake, it’s likely that competitors will absorb the difference — temporarily or permanently, depending on the situation. Conversely, businesses that come out of a major earthquake unscathed may be better positioned to fill voids left by less fortunate competitors.

Structures proven to be vulnerable to damage in a major earthquake include:

2. Create a plan for earthquake resilience for your business

Anheuser-Busch’s case of business failure and recovery is significant, because the brewery’s experience (along with stories from countless other businesses that fall victim to earthquake damage) has gone widely unreported.

It is therefore commonly misunderstood how broad the scope of financial devastation can spread from an earthquake.

Media reports of the Northridge quake focused on dramatic visuals —the flattened apartment buildings, collapsed freeway overpasses and grotesquely twisted steel-framed structures — all of which showcase the extent to which an earthquake can damage a structure. But these images do little to illustrate the magnitude of damage caused.

All total, more than 6,000 commercial and industrial structures were damaged on that pre-dawn morning of Jan. 17, 1994, according to the Public Policy Institute of California. [5]

How broadly was the damage to businesses felt?

U.C. Berkeley found that more than 36% of all businesses surveyed said the Northridge quake caused them to lose money at an average of $85,026. xxvi Could your business stand to lose that?

A similar study by the University of Delaware reached similar results, with a staggering 39% of all businesses surveyed in the Greater Los Angeles area reported suffering some sort of structural damage as a result of the Northridge quake. About a third of those cases involved damage so severe that buildings were determined to be unsafe for occupancy.  [6]

At the time that survey was conducted, (one-and-a-half years after the Northridge event), about a quarter of the businesses reporting structural damage from the quake said they had failed to recover from the experience. [7] Smaller businesses were hardest hit.

“Firms that do business in a single location risk their entire investment should disaster strike,” the Disaster Research Center at the University of Delaware reported, adding that an overwhelming 80% of those reporting damage from the quake fell into that category.

This means that all businesses — not just large corporations — have a fiscal and social responsibility to make sure it can continue operating after “The Big One” hits.

Apart from seismic retrofits of vulnerable buildings, be sure to evaluate the safety of operations inside your buildings.

  • Make certain that non-structural issues, such as shelves and other heavy objects, are strapped down.
  • Hold regular earthquake drills and train employees the proper “drop, cover and hold on” technique, finding a safe place under a desk or table to protect against falling debris.
  • Be sure to have ample medical supplies, water and food available in case services are unavailable for an extended period of time.

3. Encourage neighbors to fortify their buildings

A building doesn’t have to be completely destroyed for damage to hinder business operations.

Businesses can also suffer hardship if neighboring structures fail, but theirs does not.

Risk Analyst, Barbara Stewart calls the overarching economic impacts of a major earthquake “The Ripple Effect.”

“A catastrophic earthquake will have a national impact, and there will be national damage,” she wrote in a report for the National Academies of Science. [8]

She summarized those impacts in three categories: (1) disruptions to supply lines, (2) shocks to financial markets, and (3) drain on the insurance system.

“There has been very little study of these consequences for obvious, very understandable reasons,” she said. “It is quite human to focus on the suffering and physical damage that occurs immediately after an earthquake. The problem is that it is unknown, other than estimates of the physical damage, just how bad the general economic damage might be — and that uncertainty is a problem in itself.” [9]

In San Francisco, the Association of Bay Area Governments performed a case study of a downtown Napa coffee shop to illustrate the problems typical of hardships businesses face following a major quake.

In this study, the business did not suffer any direct damage from the quake — yet it was significantly impacted by surrounding damage and loss of services.

In the study, the unnamed business had rented the space and opened five years prior to the 2014 Napa earthquake and its customer base was split between local residents and tourists. It employed fewer than 10 people, and its annual revenues were less than $500,000. Prior to the earthquake, the business was breaking even but it was growing rapidly, but after suffering no structural damage in the quake, the shop’s operations were devastated by surrounding damage, loss of utilities and more. [10]

“The building was located adjacent to other buildings which experienced significant damage,” the study said. “For that reason, the building was posted as a ‘yellow’ placard. It took approximately 1 to 3 months for business operations to resume and approximately 3 to 6 months for the placard to be changed to ‘green’ because danger from adjacent buildings was removed… The business is currently operating at 50% reduced capacity.” [11]

Prior to the quake, the business had property insurance (including for contents), business interruption insurance, and business liability insurance. A few days after the quake, the study said, the owner made claims that were rejected. He also submitted requests for other funding from the Small Business Administration, corporate assistance, and local, state, or federal assistance and was rejected on all counts. FEMA assistance and other grant money was rejected because the business had re-opened.

In the end, the owner dug into his own pocket to fund recovery: 70% from personal savings, 20% from business revenues and the remainder from debt. [12]

Examples like these are important to consider because the threat of an earthquake is not unique to any one structure. Vulnerability to earthquakes impacts entire blocks of businesses and homes.

The Structural Engineers Association of Southern California has stated that resilience is a necessary part of any community.

“Improved performance of our community’s and region’s built environment is critically important to saving lives as well as important to protecting its economy, character and fabric,” the organization stated. [13]

4. Evaluate the cost benefits when developing your plan

Anheuser-Busch’s averted damage and loss — estimated at 30 times the costs of building upgrades and 60 times potential business loss — is indicative of the benefits businesses realize when they protect their assets.

Researchers at Caltech recently determined that for every dollar spent in retrofitting soft-story structures, property owners could expect to save up to seven dollars, and that study didn’t factor in loss to contents, alternate living expenses or deaths and injuries – all of which would have significantly increased the cost-to-benefit ratios. [14]

FEMA found similar cost benefits in a two-year analysis of seismic retrofit scenarios applied to a variety of building types in locations throughout the United States. The study found high benefit-to-cost ratios for California, including a scenario of a tilt-up warehouse building in Hayward.

“In this example,” the study found, “the benefit/cost ratio is about 10 without the value of life and about 12 with the value of life. The benefit/cost analysis suggests that retrofit is strongly justified economically, even without including the value of life.” [15] That return on investment was even higher for tilt-ups with a higher occupancy, such as light industry, the study found.

Researchers at Caltech determined that seismic retrofits are cost-effective when expected annualized loss would be reduced by 50 percent or more at a cost that would equal no more than 10 percent of the replacement cost of a building. [16]

These figures show that retrofits make good business sense. In fact, the National Institute of Building Sciences in its seminal report, Mitigation Saves, estimates that for every dollar spent on mitigation, society sees a resilience benefit of four dollars or more. [17]

These benefits, coupled with the social responsibility of protecting communities, is what prompted Los Angeles Mayor, Eric Garcetti in 2015 to sign into law what was at the time the nation’s most sweeping mandatory building retrofit ordinance.

Every building protected from earthquake damage enhances its capacity to spring back quickly from hardship – for tenants, employers, hospitals, government services and the building owners themselves. Every building saved means businesses continue to operate, families can remain in their homes, and employees can go to work. It’s another step away from the chaos and crime that can result from a community’s economy shutting down due to earthquake damage. The first step towards achieving resilience is to identify buildings that are vulnerable to damage in an earthquake.

“We’re leading the nation in requiring this level of building safety before, not after, the big quake we know is coming,” Garcetti said upon enacting the law. “It’s not just the lives lost, but the lasting social and economic effects that we can avoid by… protecting our communities.”

[1] “Earthquake Risk Management: Mitigation Success Stories,” California Seismic Safety Commission,

https://ssc.ca.gov › forms_pubs › ssc_1999-05_risk_success

[2] “Brewery Avoids Business Disruption Following Earthquake,” https://www.hsdl.org/?abstract&did=8508

[3] “Earthquake Risk Management: Mitigation Success Stories,” California Seismic Safety Commission,

https://ssc.ca.gov › forms_pubs › ssc_1999-05_risk_success

[4] Anheuser-Busch company website, https://www.anheuser-busch.com/about/culture/ten-principles.html

[5] Public Policy Institute of California, https://www.ppic.org/content/pubs/jtf/JTF_NorthridgeJTF.pdf

[6] Kathleen Tierney, DisasterResearch Center, University of Delaware, 1997. https://onlinelibrary.wiley.com/doi/epdf/10.1111/1468-5973.00040?purchase_referrer=www.google.com&tracking_action=preview_click&r3_referer=wol&show_checkout=1

[7] Kathleen Tierney, DisasterResearch Center, University of Delaware, 1997. https://onlinelibrary.wiley.com/doi/epdf/10.1111/1468-5973.00040?purchase_referrer=www.google.com&tracking_action=preview_click&r3_referer=wol&show_checkout=1

[8] “Economic Impacts of a Catastrophic Earthquake.” Barbara Stewart. https://www.nap.edu/read/2027/chapter/8

[9] Ibid.

[10] Earthquake Engineering Research Institute, https://www.eeri.org/wp-content/uploads/116_PAPER_Almufti.pdf

[11] Ibid.

[12] Ibid.

[13] Structural Engineers Association of Southern California, 2016 Safer Cities Survey.

[14] Association of Bay Area Governments, “Soft-Story Residential Buildings in Earthquakes – Risk Management and Public Policy Opportunities.” http://resilience.abag.ca.gov/wp-content/documents/PR-Soft-Story.pdf

[15] FEMA, “A Benefit Cost Model for the Seismic Rehabilitation of Buildings.” https://www.fema.gov/media-library-data/1403228695368-210f1be4cbc6a07876a737a02c69a543/FEMA_227_-_A_Benefit-Cost_Model_for_the_Seismic_Rehabilitation_of_Buildings_Volume_1.pdf

[16] Porter, Keith; et al, “Simple Estimation of Economic Seismic Risk for Buildings.” http://jimbeck.caltech.edu/papers_pdf/simplified_estimation_of_economic.pdf

[17] National Institute of Building Sciences, “Mitigation Saves.” https://c.ymcdn.com/sites/www.nibs.org/resource/resmgr/MMC/hms_vol2_ch1-7.pdf?hhSearchTerms=%22Mitigation+and+saves%22