Protecting your business against extreme weather
Australia is a land of extreme weather, and whilst there is nothing we can do to stop it occurring, we can control the extent to which we are impacted by it. Where business is concerned, controlling the level of damage that a business suffers as a result of extreme weather, and the speed at which it recovers depends entirely upon the directors and management. Regardless of the size of the business there are some fundamental strategies that should be implemented to increase business resilience to the impact of extremes in weather.
Step 1: Identify your critical business functions
What are the functions that your business must maintain in order to operate? Identify the financial and operation impact of losing these functions. Are there any regulatory or compliance dependencies? How long could your business survive without these functions in operation?
Once you’ve identified the critical business functions, list all the assets and resources required (infrastructure, machinery, vehicles, staff etc). Maintain this inventory and adjust it as your business changes.
Step 2: Identify risks
Every business is exposed to risk – some risks are inherent to all businesses, whilst others may be unique to a particular business. The first step towards mitigating risk is to identify where your business may be exposed and what would be required to protect the business if it were. In the case of extreme weather, now that you’ve identified your critical business functions, identify the weather hazards that each of these could be exposed to – hail damage, fire, storm/cyclone, floods & stormwater.
Identifying risks requires knowledge of the business and the industry it operates in, and an understanding of what constitutes a risk. Look for an insurance broker with expertise in your industry to ensure you get the right advice.
Step 3: Find the right insurance
Once you know what you want to protect and the risks they are exposed to, you need to find the appropriate insurance to cover them. Business insurance is a highly competitive area with many products and insurers in the market. If your risks are straightforward then an off-the-shelf product may suffice, however more complex businesses may require a tailored solution. If this applies to your business, look for an insurance broker with specialist knowledge and a large network that can tailor an insurance program specifically to meet your needs. Some things you may need to consider are:
- The costs associated with business interruption – loss of income, cash flow, stock, personnel, supply issues, utilities, accessibility issues
- Asset repair and replacement costs
- Policy exclusions and requirements
Step 4: Compile a Disaster Recovery Plan
Develop a Business Continuity Plan to help you maintain your critical business functions in the event of a weather disaster. While you may not be able to offer a solution to every problem that occurs as a result of extreme weather, you may be able to mitigate the impact they have (ie. loss of electricity or water supply could be temporarily overcome through an alternate source). Part of this process is nominating a key person to be responsible for ensuring the Business Continuity Plan is actioned. Larger businesses may benefit from nominating a committee.
Step 5: Invest in up-to-date infrastructure and machinery
Standards and technology change over time resulting in improvements to infrastructure and machinery and making them less vulnerable to damage from extreme weather. While not all businesses can afford to stay at the forefront of technology, where practical, businesses should look for modern and cost effective solutions for ensuring that roofs, walls, windows, interiors are built from hazard resistant material in a manner sympathetic with known risks in the area, including where applicable, flood barriers, hail and wind resistant roofs and windows, robust fire protection consistent with the risk and operations being carried out in the building.
Step 6: Maintain, maintain, maintain!
There are lots of things you can do as part of your regular maintenance program that will help you in the event of extreme weather. Things like gutter cleaning, sprinkler testing, roof repairs, staff training, flood levies etc. Not only is maintenance important to the function of your business, the validity of your insurance policy may depend upon it.
If you’ve followed these steps you are now in a good position to protect your business from the impact of extreme weather. Remember to stay in the loop with local weather authorities as knowing what’s coming will give you a big advantage and enable you to do any last minute preparation required (ie. sandbagging against flood, window shutters etc.)
If you’d like assistance with any aspect of risk mitigation please contact AB Phillips on 1300 242 136 or email info@abphillips.com.au
Disclaimer: The information in this article is intended as general only and does not consider your personal and financial circumstances. Please consider if it is appropriate for your business or contact AB Phillips for more information.