New research reveals that an adequate flood response plan can save businesses up to 70%
Flooding has been placed back on the agenda with the revelation that companies with no flood response plan suffer an average loss of £2.1m. Those with an adequate plan, on the other hand, suffered only a £600,000 gross loss.
The findings were revealed with the publication of a new white paper by FM Global entitled “Flood: An inevitable business risk?” which examines the impacts of flooding on small to medium-sized business (SMEs) and attempts to prepare them for such eventualities.
“One in ten businesses are situated on a flood plain in the UK,” said Tom Roche, operations vice president and engineering manager at FM Global. “Of this number, at least 40% do not have adequate flood protection or even risk management plans.”
The report was published in conjunction with the Environment Agency who is running a targeted campaign at UK SMEs to educate them about flood risk. A “cold” mailshot by the agency to 64,000 businesses resulted in a response rate of 24%, or about 16,000.
Businesses are encouraged to sign up to flood alerts and warning via text as the Environment Agency attempts to combat the widespread apathy surrounding the risk.
“One in ten businesses are situated on a flood plain in the UK. Of this number, at least 40% do not have adequate flood protection or even risk management plans.
Tom Roche, operations vice president and engineering manager at FM Global
“Many businesses are in denial about flood risk,” confirmed Heena Dave, flood awareness campaign manager at the Environment Agency. “Our core aim is to combat this apathy and help businesses overcome the hurdles that many associate with flooding risk management.”
The report comes after some of the worst flooding England has seen this summer. Insured losses are now estimated by the Association of British Insurers (ABI) to have reached £3bn and many businesses are still trying to recover.
“SMEs need to understand the scale of the exposure they face,” said Roche. “They need to understand the risks and they need to take action. Most businesses have fire wardens and those at risk of flooding should also have a flood warden.”
The report also highlights how current efforts to manage flood risk, such as the Thames Barrier and suburban levee systems, has led to a false sense of security in most busineses. Over time, the report states, it is all too easy to forget the underlying risk should these systems fail to operate or the flood exceeds the height in which the system was designed.
“Insurance is not a complete solution,” it surmises. “It cannot restore lost customers, employees or your business reputation. [Businesses] should be taking simple, practical and proactive steps to minimise the impact flooding will have on [their] business.”