Amivor takes this in and says, "No, with the dwarf cleric's death, if you don't feel comfortable against a combined underwater and undead assault. There is another option, one I don't like because that means we haven't pacified our backyard, but also keeps us/you from a form of action paralysis....... ignore these and the idea of pacifying the mercantile district, and start exploring the rest of Saventh-Yhi, instead."