You can predict business activity with some certainty but even your go-to guy can’t predict the weather. Your company’s resilience after a bad storm, flood, tsunami, typhoon, dust storm, earthquake, or other natural phenomenon can come undone in a wink, and with no warning.
Just a while back, in March, 2015, Australians were warned of a possible tsunami after a 7.5 magnitude earthquake hit near Papua New Guinea. We missed the massive waves on that one, but earthquakes are common in the Pacific Ring of Fire where Australians live and work.
What would you do? How would a major natural disaster affect your quarterly numbers? And how can you better prepare for a rainy day – a really rainy day?
You need a plan when the rain comes and the water is rising, but you need to develop that plan long before the first raindrop hits the ground.
Start by determining who has responsibility to maintain business activity in times of stormy weather. That person may not be the business owner who has her hands full with storm clouds looming. Select a manager to protect business assets long before those assets are at risk. Task that manager with developing strategies in the face of catastrophe.
Develop a list of business resources on which to rely, and recover more quickly from a natural disaster. Talk to your company’s vendors, sub-contractors, outsources, and other people who can provide resources when your business encounters stormy weather.
What company assets can you protect now? Piling sandbags for a potential flood probably isn’t necessary, but you can protect company data, client information, project status, and other necessary business information by storing this information in a secure site outside your office building. Secure cloud computing and automated back up enable a business to bounce back faster when bad weather strikes.
Develop a business contingency fund to see the company through the storm. If a contingency fund isn’t possible, obtain a business line of credit to help you pay company expenses until your insurer sends an adjuster to total up the costs of getting your business back to normal ASAP.
Determine what in-house assets are already in place that could be utilised in the event of a natural disaster. For example, if you have a second or third location far from the country’s coastline, you have an asset that can be used in the event of coastal flooding that takes out your main office.
Make a list of these assets and how they can be used to create a more resilient business in times of bad weather.
Do you have adequate insurance protection against natural disasters? Is it the right kind of protection? If you have a basic business policy, your company may not be covered for flood damage – something you may want to add to your insurance portfolio. Talk to your Insurance House broker to ensure your program covers all contingencies.
Make sure your insurance protection will provide funds to replace key equipment. Create an itemised list of insurable assets – the equipment and data your company must have to keep serving your clients or customers.
Also make sure your business policy provides coverage to replace or expand your employee roster when disaster strikes. You may need a workforce of temps for a few months if the office needs major repairs. Insure that your company has the personnel it needs during a rough patch.
If you don’t already have it, consider adding business interruption coverage to your policies to protect the cash flow that pays operational expenses in the event that you can’t conduct business for a week or two.
What type of natural disaster is your company most likely to face? If your business is far from the coastline and rivers, you’re less likely to be flooded out, though some downpours can create a soggy business mess.
Is the business in an earthquake prone area? If you’ve felt the earth move under your feet, you’re in an area prone to quakes, aftershocks, and recurring rumbles from deep underground. How quickly could your business recover from a major quake that rocks the company to its core?
If this sounds like a long to-do list, it is. However, imagine trying to manage these problems standing in floodwater up to your knees.
Make your business more resilient in times of natural disaster with preparation, planning, and insurance to cover the natural risks your business is most likely to encounter.
When the rain starts to fall, and the ground quakes, you can be better equipped to get your business up and running faster.
Start planning today. You can’t predict when you’ll need these plans, but it’s nice to know your business is resilient enough to bounce back when natural adversities strike.