@Risk

Would your company survive a major incident such as a fire, flood, act of terrorism, or a pandemic like the swine flu?

New research from the British Insurance Brokers’ Association (BIBA) reveals that nearly half (45 percent) of businesses have no –or only vague –plans to deal with the effects of flood or storm damage. I found that statistic alarming, considering: 1) how common flood and storm damage claims are, and 2) that earlier BIBA research found that 80% of businesses affected by a major incident close down within 18 months.

BIBA surveyed 200 small businesses in 2009 and discovered that:

• Companies are most likely to plan for the loss of physical equipment. Loss of IT, premises, telecommunications, and plant are the risks most likely to be covered by Business Continuity Plans (BCPs).

• BCPs are least likely to address negative publicity and the loss of overdraft and loan facilities.

• Only 37 percent of businesses have credit insurance protection in terms of their suppliers and/or customers.

• The number of businesses saying a disaster or serious disruption on their premises would “significantly impact” their company within an hour has increased slightly, from 19 percent in BIBA’s 2006 study to 24 percent in 2009. However, the number saying the impact would occur after an hour, but within the day, has decreased by a corresponding number – from 31 percent to 27 percent.

• Businesses are  more pessimistic about their ability to operate without their office.  The number saying that if a disaster left their office unable to operate they could recover in less than a week has dropped from 39 percent in 2006 to 28 percent in 2009.

• The numbers who claim it would take more than six months for their business to recover has nearly tripled – from 4 percent in 2006 to 11 percent in 2009.

Today’s volatile business environment, which is characterized by complex, global supply chains, demands that you work to mitigate risks –for your organization and throughout your supplier network, as well. Based on the results of its 2009 survey, BIBA advises that you:

• Have plans to replace machines, equipment and stock

• Consider what would happen if your computer or telephone system were down for three days

• Organize how you would cope in the first hour following a disaster

• Consider the effects upon your business if a major supplier or customer suffered a disaster

• Plan for continued operation of the business if 50% of staff were off sick

• Discuss Business Continuity Planning with your insurance broker

“Every business needs to be properly prepared for a major incident,”says Steve Foulsham, BIBA Technical Services Manager.