- Warren Buffett released his annual letter on Saturday.
- In it he warned about the prospect of ‘The Big One’ – a major hurricane, earthquake, or cyber attack that will ‘dwarf hurricanes Katrina and Michael.’
- Although he said such a disaster could occur tomorrow or in decades, he warned that it was inevitable and losses would be ‘very big.’
- Watch Berkshire Hathaway trade live.
Record-breaking investor and Berkshire Hathaway CEO Warren Buffett released his yearly letter on Saturday, and in it he warned about the prospect of “The Big One” – a major hurricane, earthquake, or cyber attack that he said “will dwarf hurricanes Katrina and Michael.”
“When such a megacatastrophe strikes, we will get our share of the losses and they will be big – very big,” Buffett wrote.
Although such a disaster could happen tomorrow or decades from now, one thing is sure, he said: the catastrophe is inevitable. Yet Buffett said he had a plan for such an outcome.
“Unlike many other insurers,” he wrote, “we will be looking to add business the next day.” That funding, he said, will come from deferred income taxes, liabilities that Berkshire Hathaway will eventually pay but are currently interest-free.
‘The Big One:’ a matter of when, not if
Although Buffett says the catastrophe may take the form of a natural disaster or could be something more surprising, like a cyber attack, experts have warned about the impending nature of the former for decades.
In recent years, concerns about ‘The Big One” from geologists, seismologists, and other scientists have mounted as two things have: First, evidence of our role in a steady shift in climate has mushroomed as we observe more frequent and extreme fires, droughts, hurricanes, and tsunamis. Second, our ability to predict and model the risk of oncoming natural disasters is improving at a steady clip.
Science writer Kathryn Shultz galvanised public attention to the threat in 2015 with the New Yorker essay “The Really Big One,” in which she describes how an earthquake could destroy a large chunk of North America’s coastal Northwest.
“The hand of a geological clock is somewhere in its slow sweep,” she wrote. “All across the region, seismologists are looking at their watches, wondering how long we have, and what we will do, before geological time catches up to our own.”
While some natural disasters are no fault of our own, they are in general being actively exacerbated by issues like hasty building, poor planning, a failure to invest in healthcare infrastructure and environmental protection, and an over-reliance on dirty fossil fuels, according to experts. And the outcomes – which include roof-toppling hurricanes, ground-rumbling earthquakes, and flooding and sea-level rise – will eventually affect everyone.
“The bottom line is it’s going to be bad everywhere,” Bruce Riordan, the director of the Climate Readiness Institute at the University of California, Berkeley, told Business Insider two years ago.
“It’s a matter of who gets organised around this,” Riordan said.