18 March 2014
The aftermath of the UK’s recent flooding has seen small businesses in affected areas lose more than three quarters of a billion pounds.
According to new research data by the Federation of Small Businesses (FSB), the average cost per business in flood hit areas was found to be £1,531, which amounts to a total of £831 million.
However, physical damage is not the only aspect of a business that can be affected, as customer base and supply chain disruption can also greatly affect a business and its profitability.
Speaking to Governance + Compliance, Keith Tilley, executive vice president at SunGard Availability Services commented that ‘during events like this, preparation is absolutely integral’.
He added that preparation includes communication; ‘in today’s connected world, customers and partners expect responses instantly – no matter what your local situation is – and if one part of your process or even your wider supply chain is hindered by the impact of flooding, it could be a number of months, or even years before that relationship is re-established.’
Also commenting on the vulnerabilities affected businesses face, Mark Morley, director of industry marketing for manufacturing at GXS told the publication that the flooding crisis has highlighted the vulnerability of supply chains to disruption such as natural disasters and extreme weather, which he says, has ‘even more widespread economic consequences’.
Morley added further that extreme weather is now the second most common cause of disruption, which demonstrates the need for a shift in focus ‘from reactive to proactive risk management’.
However, post-disaster, FSB National Chairman John Allan has said that scores of members have been left devastated by some of the worst flooding on record and while ‘Government support has been welcome ... with many still affected, that support needs to be kept under review’ as ‘not only have they had to cope with a lack of demand for their services, many have had to close’.
Going forward, one main concern for the FSB, that it highlighted was the difficulty small businesses will face in obtaining insurance; 37% of FSB members in flood hit zones expect it to be more difficult to renew their insurance and more than half (59%) expect their insurance to become more expensive as a result of being left out of the Flood Re support scheme.
Allan commented further, saying ‘we know small businesses are worried they will find it increasingly difficult and considerably more expensive to insure their businesses ... the evidence we have from our members points to small businesses' exclusion from the Flood Re scheme being unhelpful. We want the Government and the insurance industry to look again at the support they have in place for small businesses in flood hit areas and see whether there is more help they can provide to ensure they have access to adequate and affordable insurance.’