The complete economic impact of this summer’s wet weather will not be known for some months, but we know from previous events that extreme weather has a damaging effect on the bottom line for many businesses.
There’s no doubt that we’ve experienced one of the wettest early summers on record in the UK.
The sustained heavy rainfall has already impacted the entertainment industry, with both regional and national events being cancelled or severely dampened. Several communities have had their homes and business damaged by floods. And now farmers and food producers are starting to count the financial cost with grapevines withering, strawberries rotting and a shortage of potatoes leading to an increase in the price of chips.
The complete economic impact of this summer’s wet weather will not be known for some months, but we know from previous events that extreme weather has a damaging effect on the bottom line for many businesses.
Single catastrophic events, such as the 2007 floods, cost the economy £3.2bn and a report for the Government predicts the annual cost of flood damage in the UK could eventually rise to £12bn a year.*
The winter of 2010/11, dubbed the Big Freeze, was the coldest December since records began with temperatures dropping to a record -18.7 in Northern Ireland on 23rd December 2010. The UK experienced severe disruption to the road and rail network, and several airports were closed. According to the Federation of Small Businesses (FSB), this cost the economy between £600 million and £1 billion per day.
A new study, co-authored by the Met Office suggests that the extreme weather events in the last few years may well be linked to global warming and climate change. So it’s time we got used to the fact they occur and put measures in place that protect our businesses from the risks.
As the founder of a business that focuses on keeping organisations safe, operational and effective during the harsher winter months, one question I am keen to ask is ‘what are businesses doing to adapt to climate change?’
When it comes to continuity planning, businesses need to accept that unusual weather has become the usual. Adapting to climate change should be made as high a priority as possible to guard against potential financial losses, environmental damage and the emotional damage severe weather events can have upon communities.
This involves changing our thinking to extend continuity plans further than just major catastrophic events. Our business has grown tenfold in the last five years as organisations have started to do just that, by recognising the benefits of being prepared for winter so that they remain operational throughout.
We keep business and retail parks, hospitals, supply chain distribution centres, manufacturing sites, water treatment plants and many other sites clear of snow and ice. This prevents accidents, reduces the unnecessary costs of injury and protects our customers’ budgets from unpredictable peaks when the snow falls.
However, snow and ice are just part of a bigger picture, so what else should businesses be doing?
Understand the risks
Businesses will need to get used to smaller, more regular, extreme weather events happening, for example droughts, floods, snow and ice.
By reviewing and understanding the impact these weather events can have on day-to-day operations, businesses will be able to put measures in place to mitigate against the risks.
The risks are individual to each business and will vary from site damage or distribution disruption, to staff absenteeism. The Forum of Private Business (FPB) warned that during the 2010/11 big freeze, absenteeism caused by the severe weather could have cost UK businesses £230m a day.
Invest in prevention
Investing in preventatives, or alternative means of operating is by far more cost effective that trying to deal with an event after it has impacted on your business.
With extreme weather on the increase, businesses need to make investments which ensure they can continue to deliver their most critical services irrespective of the conditions, or risk paying the higher cost if they are not able to do so.
In our case, we’ve invested heavily in technology systems that strongly support our business continuity plan. We looked at minor incidents and major issues and what systems we needed in place to ensure our service continues to be delivered in all circumstances.
For example, if a team member is stuck in snow or a vehicle breaks down, we’re immediately aware and can have another operator takeover his schedule. At the other end of the spectrum, if there was a major incident at our head office, we could move to one of six other sites and be operational again within an hour.
Insurance
Another option that is gaining in popularity is weather insurance. Although still considered alien, and in some cases expensive, like any commoditised product, with volume it will soon gain mass-market acceptance. With continued unusual weather patterns, it is only a matter of time before business owners will be routinely taking out insurance against the weather.
Although there is no one single panacea and the solution needs to be tailored to each and every business and scenario, now is the time to get smarter in the way we deal with climate change or we risk paying the price.
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*2007 flood cost from the Environmental Agency/flood predictions from a 2012 national assessment of the risks of climate change, conducted for the Government.
