BUSINESS INTERRUPTION - 31.01.2007

Keeping your company afloat

Wet weather problem

Back in the summer we were being warned of serious water shortages. Many businesses were seriously affected by the emergency drought measures. Now, the Environment Agency reckons that five million people and at least 185,000 businesses are at risk of being flooded this winter. It’s all to do with climate change, apparently. Although we might get less rain in total, when it does fall, it tends to be in torrents leading to potentially devastating floods. OK, so the risk is on the increase but what can your company do about it, other than keep a close eye on the weather forecasts? And anyway won’t insurance sail in to save the day if you are hit?

The downside

As a director, it’s your duty to ensure that the company remains able to trade solvently. If you haven’t assessed the risks properly or put in place adequate preventive measures, it’ll be your neck on the block. Of particular concern should be the indirect costs to the business. Last year, one of our subscribers was hit really badly. Although they had few problems claiming for the damaged stock and premises, their customers didn’t have a clue what had happened to the business. Winning back their custom has proved to be extremely difficult.

Won’t insurance cover it?

Insurers have taken a hammering in recent years - both from flood damage in the UK and exposure to storm damage worldwide. Now, insurers don’t like losing money and when they do, we all have to pay - premiums rise, extra conditions might be added or cover refused outright. So you can no longer assume that just because you signed the renewal cheque, everything will be OK.

Tip. Contact your broker/insurer to see how extensive your cover is under the “all risks” and “storm and floods” sections. You may find that when your policy was last renewed, cover was withdrawn or restricted but you may not have noticed it. Some insurers rate solely on postcode - if you’re in an at risk area (as defined by the Environment Agency); simply enter your postcode at http://www.environment-agency.gov.uk, you might not be able to secure cover - even if the area has no flooding history whatsoever. If you can’t count on insurance then you’ll need to make financial provision.

Plan for the worst and it’ll never happen

To protect your company (and your own position) you need some kind of disaster recovery plan. It sounds very drastic - but it needn’t be anything too involved and it needn’t cost a penny.

Where to go. The most important requirement is to have alternative accommodation. It might be your study at home or your neighbour’s garage.

Tip. Make sure too that you’ll have at least one phone line to hand. Consider adding a business line at the alternate location.

Compute it. Your computer system may be vital. Check with your system provider how your business can operate from different sites with fragmented information. Will they even support you away from the normal site?

Records. Of course you’ll need all your customer information - they will stay loyal for a while as long as they know what’s happening. Take records off site now - keep a duplicate set at home.