When Earth Rumbles, Will Silicon Valley Tumble?
As Silicon Valley remains firmly rooted as the global center of technology and innovation, rarely mentioned is one huge fact that could blunt a ton of good vibes: The area is due for a major earthquake. “There are going to be infrastructure problems,” David Walters, Cisco Systems ( CSCO ) director of global safety and security told IBD. “If it’s 6.5 or greater, the bottom line is that a lot of people are going to be walking.” The U.S. Geological Survey says there’s a 72% chance of a magnitude 6.7 or greater earthquake on one of the region’s many faults in the next 30 years. The percentage shoots up to 89% for a magnitude 6 or greater quake, USGS scientist Morgan Page told IBD. Either could be catastrophic. “The Bay Area has the highest density of active faults per square mile of any urban center in the country, and on a long-term basis it has the highest amount of earthquake energy released per square mile of any urban center in the country,” David Schwartz, a geologist with the U.S. Geological Survey, told the East Bay Express in 2005. “So we’re really kind of living at ground zero.” Silicon Valley Earthquake Damages Could Near $200 Billion A magnitude 7 or greater quake would “likely” spur damage to buildings and infrastructure in the range of $95 billion to $190 billion, says Renee Lee, an analyst with Risk Management Solutions, a firm that models risk for insurance companies. “Despite the area being really well educated about earthquakes, and the substantial investments in infrastructure, we will expect to see some pretty significant damage if there’s a quake along the Hayward fault.” Scientists have long considered the Hayward fault one of the most likely candidates for a major quake within a few decades. The fault runs through Oakland and other heavily populated East Bay cities. What’s all but certain is that Silicon Valley will experience widespread utilities losses — water, power — as well as damage to buildings and infrastructure such as roads and bridges. A phenomenon called liquefaction — in which normally solid soil acts like a liquid — could wreak havoc on any firms with offices near the San Francisco Bay’s shore. Oracle’s main campus, for example, sits atop what’s called bay fill, a material that is highly susceptible to liquefaction. ( Oracle ( ORCL ) spokeswoman Jessica Moore refused to comment on the company’s business-continuity plans in the event of an earthquake, or any other natural disaster.) Facebook ( FB ) and Alphabet ( GOOGL ) also have large campuses located on land susceptible to liquefaction — though less so than Oracle’s (neither of these companies responded to requests for comment). The liquefaction risk to Apple ‘s ( APPL ) office in Cupertino is low. The good news is that the Internet will almost certainly continue to function, for the most part. Service disruptions are likely, but the core backbones that tie the Bay Area to the Internet will remain intact. That might not have been the case 15 years ago, though “even then there were major fiber cuts that the Internet weathered fine,” Mike Leber, CEO of Hurricane Electric, an Internet backbone provider, told IBD via email. And many Silicon Valley companies have been sure to locate data centers in other parts of the country, so service disruptions are less likely. “Our data centers are located at sites which have limited potential for severe weather and seismic events,” Yahoo spokeswoman Carolyn Clark told IBD in an emailed statement. Yet, though the experts can make educated guesses, no one knows how a big one might affect Silicon Valley, or any area, says Anne Wein, a USGS operations research analyst. “The hard work is going to be to get a description about what will happen,” she told IBD. “We’re just not there yet.” The USGS is studying the issue, what it calls “Project Haywire,” and is aiming to complete its research in April, according to spokesman Justin Pressfield. In the meantime, uncertainty will persist. “We haven’t had a major earthquake in the U.S. since we have become so connected with wired and wireless technology,” Wein said. “Do we have new vulnerabilities? How much redundancy is there? How will this new technology help us recover?” Of 15 large Silicon Valley tech companies — and several startups valued by investors at more than $1 billion — that IBD contacted for this report, Adobe Systems ( ADBE ), eBay ( EBAY ), Oracle and PayPal ( PYPL ) declined to comment and nine did not return the request. Cisco provided access to executives for a wide-ranging interview, and Yahoo issued a brief statement. When asked why tech firms are reluctant to discuss business-continuity plans, Sam Singer, a public relations executive who specializes in crisis situations, said tech companies are “better at talking about services and products. They’re not prepared to talk about public policy issues, safety issues, even though they ought to be.” He says that there’s no reason why companies shouldn’t be able to describe how they would deal with a natural disaster in the Bay Area without giving away proprietary information. “It’s important that companies discuss earthquakes,” Singer said. “They need to be leaders, and offer reminders to their employees, the public and the news media that we live in earthquake country.” Dick Evans, president of the Business Recovery Managers Association, a networking and information group for disaster recovery planners, told IBD that his group used to have more membership among major Silicon Valley firms. At the moment, he said, “we don’t have as many as we would like.” What Preparedness Might Look Like Cisco has been active in preparing for quakes. It might take the issue more seriously than others, in part, because it’s among the tech giants that were around during the Loma Prieta earthquake of 1989, Walters says. That quake, centered near San Jose and San Francisco, killed 63 people, displaced 12,000, destroyed an estimated $6 billion worth of property and caused an unknown amount of productivity losses. At Cisco’s main offices in San Jose, Walters says the company maintains what it calls “Arks,” which store water, food, tents and emergency supplies for all employees on site — enough supplies to last up to three days. And executives all carry three-day survival backpacks in their vehicles, he says. The company also has a mobile operations center that can staff 13 — and can turn it into a kind of mobile office for execs. The company has five command-and-control centers around the world — with satellite communications abilities and backup generators for incident response vehicles. And the company conducts earthquake drills at its main offices. “We have the right processes, right supplies,” Walters said. “We know as much as we can about the fault lines and we want to be as knowledgeable as possible.” He adds that USGS scientists come in from time to time to talk about the fault lines with Cisco’s safety and security team. The company also monitors incidents around the globe, and has a Tactical Operations team that it deploys on humanitarian missions to restore communications connectivity. Yahoo was willing to share a few details of its plans, though declined to provide access to business continuity executives. Spokeswoman Clark, in a statement, said “Yahoo has prepared our technology, as well as our physical spaces, to allow us to continue to run and operate our business either in California or other parts of the world in the event of catastrophe. We have invested at our mission-critical facilities to provide for alternative power supplies that will allow those facilities to run in the event of a loss of power or other utilities.”