Across the globe we’re experiencing climate and weather-related catastrophes at unprecedented levels.
According to the World Economic Forum’s 2024 Global Risks Report, environmental risk has ‘hit the point of no return’, meaning that weather-related crises are likely to dominate the risk landscape for businesses throughout 2024 and well into the future.
In 2023 alone, Australia experienced record-breaking rainfall and tropical storm activity, which gave way to increasingly dry and hot conditions over the 2024 summer, paving the way for drought and heightened bushfires.
And according to the Insurance Council of Australia, the insured losses due to extreme weather events for the four-month period ranging from September 2022 to January 2023 alone totalled $1.6 billion.
As a small business owner, you’ve most likely experienced some form of business interruption brought on by extreme weather, either first-hand or indirectly.
In this article, we outline some proactive steps to help you take to better adverse weather conditions and the disruption they can cause to your business.
1. Assess your vulnerabilities
Don’t wait for something to go wrong. Conduct a thorough assessment of your business's vulnerabilities to weather-related disruptions. Consider and identify where you do business, and how. Critical areas that could be affected include:
- Stock inventory and supply chains
- Infrastructure and assets
- Customers.
By understanding your vulnerabilities, you can develop targeted strategies to minimize the impact of adverse weather conditions.
2. Develop a business continuity plan
It might take a little time to pull together, but having a robust plan in place can make all the difference to you and your team in the time of crisis – and it can also help you obtain a better insurance package, as insurers look favourably to businesses who are well prepared to manage and mitigate risks.
Your plan should outline the steps to be taken before, during and after an event occurs, including:
- communication protocols – key triage contacts (including emergency services), how will you contact staff and deliver regular updates or two-way communication
- strategies to deal with protecting your stock and inventory- consider storage locations such as floor stock, and anything else that can be compromised
- strategies for dealing with utility outages – power, internet, water
- strategies for resuming operations swiftly
- insurance contacts and details – your broker/account manager (if you have one) and your claims line
- Documentation (e.g. accurate asset valuations) and photographic evidence – if you need to make a claim.
3. Protect your income with insurance
You can’t always avoid disruption and damage due to weather incidents, which is where insurance kicks-in. It’s important you review your insurance policy at least annually, to ensure your business has adequate coverage for:
- business interruption
- property damage
- personal injury
- other weather-related risks.
To obtain the most comprehensive and competitive cover, it’s best to consult with a specialist business insurance broker who can work with you to match you to the right solution.
4. Monitor the weather
Stay informed about weather forecasts and warnings to anticipate potential disruptions. You can use weather monitoring tools and services to receive real-time updates on severe weather events. You can take proactive measures to safeguard your business and minimise the impact of adverse weather conditions.
5. Build resilience
Investing in your resilience means that you are better placed to withstand and recover from weather-related disruptions. Being proactive and taking necessary precautions can help safeguard your operations, minimise financial loss and ensure the long-term success of your small business.
Take some time to install emergency measure such as:
- installing backup power systems
- investing in flood or fire protection devices
- making sure all staff have access to emergency response procedures.
Find the confidence you need
For expertise to help your business thrive, talk to one of our business insurance brokers who can source comprehensive and competitive insurance for your business. Contact Realcover today on 1800 990 312 or visit realcover.com.au for more information.
Marsh Advantage Insurance Pty Ltd (ABN 31 081 358 303, AFSL 238369) (“Marsh”) arrange the insurance and are not the insurer. This publication contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire the product, refer to the specific policy wordings and/or Product Disclosure Statements available from Marsh on request. This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.
The Real Estate Institute of New South Wales Limited (ABN 51 000 012 457) ("REINSW") is an Authorised Representative of Marsh (ABN 31 081 358 303, AFSL 238369) for the purpose of promoting the Realcover products to members of REINSW. LCPA 24/134.
1 Marsh McLennan and Zurich, January 2024, World Economic Forum 2024 Global Risk Report
2 Marsh, November 2023, Guide to natural hazard and climate risk management
3 Insurance Council of Australia, September 2023, 2022-23 Catastrophe Resilience Report