Small businesses vulnerable to survive major incidents

The British Insurance Brokers' Association (BIBA) is calling on the Government to do more to ensure that small businesses survive a major incident such as a fire, flood, act of terrorism, or a pandemic such as swine flu, particularly during the current economic downturn.

Independent research commissioned by BIBA has revealed that 45% of businesses have no, or at very best, rough plans to deal with the effects of flood or storm damage. This is despite the £3billion of flood claims from 2007 and that 80% of businesses affected by a major incident close down within 18 months

The research has revealed that the number of small businesses who claim it would take more than six months for their business to recover has nearly trebled. BIBA believes that small businesses must have adequate plans in place to cover business resilience and is concerned businesses are putting themselves at risk.

Steve Foulsham, BIBA Technical Services Manager, said: "There have been slight improvements since our previous research in 2006 but we still have concerns that businesses are still not adequately protected.  Every business needs to be properly prepared for a major incident. I urge every small business to urgently speak to their broker to ensure they are properly covered."

Steve Foulsham added: "It is vital to raise and maintain awareness of the need for businesses to prepare for the potential impacts of a natural disaster or terrorist attack.  The Buncefield Oil Depot fire, 7/7 bombings and continued incidents of flooding illustrate the need for all to plan for the unexpected. 

"BIBA will call for the support of the Government in campaigning for all businesses to set continuity plans in place."

The research also reveals that few (15 per cent) of the directors interviewed were aware of BS25999 in relation to Business Continuity Management - this is the British standard to help minimise work disruptions.

As an essential first step, BIBA advises businesses to:

Have plans to replace machines, equipment and stock

Consider what would happen if your computer or telephone system were down for three days

Organise how you would cope in the first hour following a disaster

Consider the effects upon your business if a major supplier or customer suffered a disaster

Plan for continued operation of the business if 50% of staff were off sick

Discuss Business Continuity Planning with your insurance broker