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The impact of natural disasters on small businesses can be devastating, yet only one in four small businesses has a current business continuity plan.
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In many cases, small business owners are operating uninsured, underinsured, or with excesses payable that prohibit them making a claim when experiencing acts of god, accidents and theft, just to name a few.
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Taking simple steps to be better prepared and bolstering resilience can help small businesses recover faster after natural disasters such as floods and fire.
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Small business owners are reminded to consider Business Interruption insurance* as it provides protection for the loss of income and increased costs of operating their business when impacted by a specified insured event.
With natural disasters including bushfires, droughts, and floods hitting Australian small businesses hard in recent years, small business owners are being reminded to consider the role that Business Interruption insurance can play in their business continuity plan.
On November 10, Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, unveiled the Small Business Natural Disaster Preparedness and Resilience Inquiry report in Federal Parliament in the wake of rolling natural disasters impacting small businesses, including bushfires, droughts, and floods.
In launching the report, Billson highlighted that preparation can be key to small businesses building resilience, which can help them reduce the risks of natural disasters to their business.
Alarmingly, one of the key findings in this report was that, “in many cases small business owners are operating uninsured, underinsured, or with excesses payable that prohibit them making a claim”. Indeed, only 43% of small business owners think they are fully covered from insurable business risks.
“Being underinsured – or even worse, uninsured – can expose small business owners to risks that they may not be able to recover from,” explains Jane Mason, Head of Product, Channels & Risk at business insurance comparison website BizCover.
“The impact of natural disasters on small businesses can be devastating, so having a business continuity plan that clearly defines how your business will recover from a natural disaster can make all the difference for the future of your small business. And this is an area where business insurance such as Business Interruption insurance can help small business owners.”
Jane Mason, Head of Product, Channels & Risk at BizCover
How to create a business continuity plan in four steps
Step 1: Define the risks to your business
Different businesses will be exposed to different types of risks. Take the time to identify what types of risks can potentially negatively impact your small business.
Step 2: Develop and implement preventative measures
Take proactive steps to reduce the risks to your business before they cause problems for your business.
Step 3: Have an action plan
Outline the specific steps that you will take if an incident does occur that negatively impacts your small business. This may include measures such as fire drills, convenient access to first aid kits, and having emergency contact phone numbers on hand.
Step 4: Have a recovery plan in place
Arguably the most important step in your business continuity plan is how you will recover from a disaster as soon as possible and get your small business up and running and trading again.
Business Interruption insurance can provide coverage for loss of turnover due to damage to your own premises as a result of an insured event, as well as any additional costs of working. Examples of types of events where Business Interruption insurance can help small business owners include:
- Storm, hail, lightning, flooding.
- Busting, leaking overflowing pipes.
- Burglary or theft.
- Glass breakage.
- Accidental damage.
- Malicious damage.
“If your business is in the 75 per cent of Australian small businesses that doesn’t have a current business continuity plan in place, it’s not too late to create a plan to reduce your risk,” explains Mason. “Business Interruption insurance can play a leading role in helping you and your business get back on your feet quickly following a natural disaster.”
*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
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