Business Continuity Plans

Business Continuity Plans

 According to national figures 1 in 6 properties in England are at risk of flooding including various businesses.

More than 5 million people live and work in 2.4 million properties that are at risk of flooding from rivers or the sea, one million of which are also at risk of surface water flooding.

A business can be flooded by a river (fluvial) or by the sea due to a coastal storm surge and any business can be at potential risk of flooding, even if it is not located near a river or the sea. One of the most common misconceptions about flood risk is that one must be located near a body of water to be at risk.

Pluvial flooding debunks that myth, as it can happen in any urban area — even higher elevated areas that lie above coastal and river floodplains

Some of the fundamental questions that business owners need to ask themselves:

1. Is my business actually at risk of flooding?
2. Where can I find this out? (here on EA website)
3. How much would this event cost to repair?
4. Does my insurance cover for flooding?
5. What could my uninsured losses be?
6. How will it affect my business if it was to ever happen?
7. How much will an event such as this cost my business in lost sales, revenue or market share?
8. Will my business ever recover from this type of event?

If a business is unlucky enough to find itself at risk of flooding, it is sometimes a cheaper and less stressful option, to plan and mitigate against such an event. Not only will this reduce repair costs but will reduce the effect on the business and reduce the potential losses to safeguard its future

Depending on the location of a business, it is important to ensure that potential risks have been assessed with regards to flooding in order to protect it.

As the Pitt Review noted, following the 2007 floods, climate change is producing more extreme weather patterns and more intense storm events. It is likely that more properties will be hit by surface water (pluvial) flooding over the next 25 years than by 'traditional' river (fluvial) flooding, and most of these will be affected for the first time.

Statistics:

• Approximately 185,000 commercial properties are at risk of Flooding in England and Wales [1]
• Businesses are more likely to be flooded than burnt down
• Cost of fire damage (￡7,300) was on average four times less than flood damage [1]
• Some service providers estimate that flooding now accounts for nearly 10% of major business disruptions
• The average losses from a flood are ￡28,000, compared to ￡1,033 for a burglary [1]

Summer 2007 Floods

• Over 9,000 businesses were affected [2]
• Cost for flooded businesses averaged between ￡75,000 and ￡112,000 [3]
• Cost of damage to infrastructure such as water supplies and power networks was calculated at ￡660m [3]
• Damage to communications, transport and roads of around ￡230m, with costs to local councils of ￡140m, while agriculture suffered losses of ￡50m [3]

Sources - [1] Environment Agency, [2] BBC, [3] Research commissioned by Environment Agency's Evidence Directorate, January 2010

In England, the Environment Agency is responsible for building, maintaining and operating flood defences and for issuing flood warnings to the public, other flood-responding organisations and the media.

In Wales, Natural Resources Wales and in Scotland, the Scottish Environment Protection Agency are responsible for this role. 

Flood risk areas have been identified by the Environment Agency, Natural Resources Wales and Scottish Environment Protection Agency and are published on flood risk maps showing areas which are considered to have up to 1 in 100 (1%) chance of flooding from rivers, 1 in 200 chance of flooding from sea and 1 in 1000 extreme flood extents in England and Wales.

The Scottish Environment Protection Agency has published flood risk maps showing areas with up to 1 in 200 chance of flooding from rivers or sea.

The Environment Agency, Natural Resources Wales and the Scottish Environment Protection Agency Flood line service (0845 988 1188) is open 24 hours, calls are charged at local rate. By taking a business's postcode, operators can check and see if it is in a flood risk area.

Business's can also sign-up to receive Environment Agency flood warnings direct to a designated phone number, mobile, SMS text message, fax or pager here. Natural Resources Wales utilise the services of the Environment Agency to provide flood warnings therefore the same link should be used for Businesses located in Wales.

The Scottish Environment Protection Agency also provide a flood warnings service which can provide advance warning of flood events. Business's can sign up for this service here.

The Consequences of Flooding

• Damage to property, stock and equipment
• Loss of income, customers and business

Mitigating measures, to reduce these consequences can be used to satisfy legal obligations to employees, the public and the environment.

Insurers classify risk of flooding to existing properties as:

• Low (1 in 200 years or better)
• Moderate (greater than 1 in 200 but no more than 1 in 75 years)
• Significant (1 in 75 years or worse)

Properties at significant risk may be refused full insurance cover in the future or asked to pay higher premiums, which could be cost prohibitive. If you have a Business Continuity Plan in place that mitigates against your known Flood Risk then your insurers may make allowance for this in your proposed premium.

80% of businesses do not survive more than 18 months after a disaster; Businesses who survived had Business Continuity Plans!.

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