This year's devastating floods in the UK have highlighted the need for solid business recovery plans, says Robert Hall

According to unofficial estimates, around 14,500 businesses were directly affected by the floods in the UK in June and July, the wettest summer months since records began. Many more companies - perhaps ten times this figure - were indirectly affected by disruption to supplies, employees and transportation. The impact has been significant, with insured losses over £2.5bn and total losses believed to be about £6bn. In practical terms, some reports suggest that around 40% of businesses will not trade a year after being flooded.

The floods have refocused attention on the steps that businesses must take to plan for a repeat of such eventualities. Predictions are that flooding is likely to get more frequent and severe: more localised deluges are forecast. Climate change is happening and businesses must learn from the experiences of others.

One lesson from the summer floods in Britain was that the effects were not just associated with rivers bursting their banks. Torrential surface rainwater, and overwhelmed, antiquated and inadequate drains, can result in floods even on higher ground while extreme water levels in ill-maintained dam walls can lead to structural failures with area flooding.

“Some reports suggest that 40% of businesses will not trade a year after being flooded

Local authorities have also learnt lessons from the floods in terms of their emergency planning and insurance portfolios. Many were found to be wanting, yet the early restoration of essential services is key to getting companies back in business. As a result, contingency plans for some local authorities should be reviewed and business interruption insurance considered where appropriate.

For businesses and authorities that have the foresight and willingness to tackle flood risk, the costs of implementing contingency measures may be offset by a reduction of insurance premiums.

As premiums are expected to rise as flood damage becomes more prevalent, then risk optimisation is an important factor. Sensible business contingency planning in the light of recent flooding should allow a company to face future disasters without undue loss of customers, reputation and revenue.