Preparing for this year’s risk of floods – is your business covered?

By Steve Taggart

As the winter draws closer and the darker evenings creep in, we are reminded of how the UK weather really can pack a punch. This forces us to question how prepared we really are for the upcoming cold temperatures, flooding and snow that is already being predicted this year.

With the extra rainfall that fell last year and the series of horrendous floods that followed up and down the country, it is not just our homes but also our businesses that we must protect. Last year, we experienced the worst flooding in the UK since 1766. The News was littered with imagery of broken river beds and businesses under water – a worrying prospect for any company to experience. The economy took a long time to recover from the flooding, and businesses lost £830m as a result. Unfortunately, those businesses that were already in a weak financial situation suffered the worst.

This year, tens of thousands of small and medium sized businesses (SMEs) are at potential risk because they face a new increased chance of flooding. AMEE have recently released an infographic that shows a correlation between SMEs in flood risk areas and financial risk. The data suggests that 252,000 SMEs are located in high risk flooding areas; this affects 7% of the UK.

When we take a closer look at the data, we can see that a large proportion (42,093) of SMEs which face both flood and financial risk are located in London, with the South East accounting for 15,592 at risk businesses. 10,888 are located in North West England, and 9,833 in the North.

The Chief Executive Officer at AMEE, a company that provides insightful data linked to the increasing challenges SMEs face with environmental change and financial risk, commented, “The overall take-away is that a significant proportion of businesses are at risk of flooding and are more exposed to financial risk.”

When we look at the figures for companies already in financial risk, it shows just how vital it is to have your business covered. For example, if we look at the figures in London, the capital city was again found to have the highest number of SMEs at financial risk, with 27.7 per cent of businesses already at risk.

Of course, SMEs that did suffer the flooding last year were then increasingly worried about their future insurance premiums. An FSB poll found that 37 per cent of companies surveyed that were impacted by floods last year expected their insurance to be harder to renew.

Taking action now

It therefore seems prudent for companies to prepare for the risks ahead of the winter months, before it is too late. The cost of flooding to SMEs can be highly damaging, closing a business for good. Last year in Somerset alone, the financial impact per company reached an average of £17,352 over a six week period.

In order to take action, businesses should ensure they are properly covered with flooding insurance. They should also assess their suppliers in order to reduce as much disruption risk as possible if the worst should happen. If companies plan to take out a loan or other capital, it is important to bear the flooding risk in mind when reviewing repayment schemes and investments. Physically, if you work in a high-risk zone, it is important to back up your data and paperwork and put measures in place for how you can operate if your premises is affected by floods.

Will it happen again?

We have no real way of telling whether the UK will be hit like it was last year with devastating floods. The unpredictable nature of our weather means that often we are unprepared. Preceding the floods by a year was a period of very heavy snow. Forecasters seem hazy in their predictions so far, with many agreeing there will be heavy rain throughout winter but with no real way of telling how badly this will affect us in terms of flooding.

Preparing the country

Following last year, you would think the Government would put appropriate measures in place to minimise flood damage. Last month, the Environmental Audit Committee issued the Government with a red card for poor efforts in the issue of flooding prevention. In fact, the Government cut their annual flood defence spend considerably after they were elected. This means if there is heavy rain flow and rivers break their banks, we are able to do less about it to physically protect our shop fronts.

Having said this, in the worst hit areas of Somerset, a coastal flood management scheme costing £20 million was created, which meant that a 250-hectare salt marsh was added to the landscape to naturally absorb high tides – acting as a barrier to floods.

Essentially, businesses need to plan ahead. Whatever your industry and whatever the size of your business, it is important to have plans in place should the UK weather make itself known again, and flooding seriously impact your business. And remember, even the smallest amount of disruption can harm your business – from a loss of internet connection to a late order delivery of stock.

Photocredit Wikipedia

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