Building resilience in your business against extreme weather
According to the Intergovernmental Panel on Climate Change (IPCC), wind storms, heatwaves, floods and droughts are all likely to become more common and more severe in the future. Hurricane Harvey has given us a glimpse at what this future could look like for people, and for businesses. But far from scare-mongering, FM Global – experts in commercial property insurance and business resilience – believe that if you future-proof your organisation, you can handle anything that nature throws your way.
Here are our top ten tips:
1) KNOW YOUR ENEMY
Extreme weather events are volatile and capable of causing great harm. They also may be unpredictable, at times. But we’d like to help you to change your mindset: if you know your enemy, whatever attack is launched on you, you can protect yourself. For example, if your commercial properties – or those of your manufacturers thousands of miles across the world – are located in areas that are prone to flooding, it pays to know this information, and plan accordingly. For example, FM Global’s ground-breaking Global Flood Map provides a worldwide view of moderate and high-hazard flood zones. We use hydrology and hydraulic science to assess the danger zones as well as essential information on rainfall, evaporation, snowmelt and terrain. What this all means for your business is that by using such trusted resources, you can prepare and protect against flooding – one of the most devastating and costly natural disasters of all.
2) ANALYSE YOUR RISK:
Before spending a dollar on commercial property insurance, your business should get a thorough risk analysis from experts. This helps you understand the lay of the land and your unique exposures before you invest. Perhaps your manufacturer is based in a zone that’s prone to flooding in Asia, or back at your headquarters, you haven’t thought about how to protect your machinery and equipment – or even your data. Whether large or small, you need to understand exactly what your particular risks are as an enterprise and therefore what to spend your money on to avoid setbacks and interruptions.
3) UNDERSTAND VULNERABILITIES IN YOUR SUPPLY CHAIIN
The smooth operation of your supply chain is key to your business’ success. Any disruptions in the chain can put your entire business at risk. Delays in production and distribution, reduced revenue, and decreased market share – these are just some of the significant and costly consequences. And if future weather predictions ring true, then this volatile situation for global businesses isn’t going to disappear. Any advice or policies you take out need to be personalised to your suppliers’ location, and also your suppliers’ suppliers
4) PARTNER WITH EXPERTS – BEFORE, DURING AND AFTER LOSS
Many organisations – and insurers for that matter – treat loss as inevitable. We firmly believe it’s preventable and that echoes throughout all our products and services. It’s guided FM Global since our creation. With this ethos, we do everything we can to understand your business needs and reduce your risk. Whoever you partner with, the relationship needs to start before an event outside your control happens, during the crisis, and after loss. Simply investing in insurance that covers the damage that’s been done may end up costing you more in the future. We help businesses protect themselves in the first place, therefore mitigating costly damage as much as possible. We guide and support, so there are as few disturbances and interruptions as possible when something happens. And we help organisations get back up on their feet afterwards.
5) THINK AHEAD
Protection of your business can start in the early planning stages of building a new property, before even a brick is laid – from the ground up. Property loss and prevention, and insurance, should be at the forefront of your mind before you begin new construction – as well as expansions or acquisitions. Project risk management experts should guide you through the details, and despite an initial investment to flag up any design deficiencies or exposures, it will pay in the long run as it will reduce your risk of loss, and possibly lower premiums.
6) QUESTION MONEY SPENT VS VALUE
On that note, of course, everyone wants a good deal. However, commercial property insurance that is cheap should be a warning sign. Loopholes in your cover may cost you tenfold if an extreme weather event disrupts your business. Insurance is an investment, and it safeguards you against future costs that have the potential to spiral out of control. We are not recommending you spend the earth either. But, do your homework first – and make sure you’re not still at risk, despite paying for cover.
7) GET PERSONAL
Your relationship with your insurer should be a partnership. The way we work is with face-to-face meetings with our customers, and ongoing communication. A hands-off approach should be a warning sign that the client is not valued or considered unique. When your business continuity is at stake, you need so much more than an insurance company. You need a business partner in risk management and resilience.
8) BE FLEXIBLE
Many insurers say they will cover you, but are they truly flexible to your needs? As businesses across the world face unprecedented challenges and risks, versatile commercial property insurance is needed more than ever. In our global world, with unprecedented and complex supply chains and interdependency, a ‘one size fits all’ approach is rarely enough.
9) KEEP UP WITH THE TIMES
Traditional insurers still use an actuarial approach to underwriting. Numbers, essentially. We believe in an engineering-based approach. Specialist engineers should visit your sites and facilities and evaluate the construction, occupancy, levels of protection and exposure. Only then will you receive a thorough loss prevention programme that’s based on your unique business model.
10) AND ABOVE ALL, BE RESILIENT
Resilience actually happens before a loss occurs. Your ability to withstand loss is what will make you impenetrable as a business and able to succeed where competitors might fail. Robustness needs to echo down your supply chain, and so the resilience of these countries is an important consideration. The FM Global Resilience Index is the first data-driven tool that ranks the resilience of 130 countries and territories, according to their enterprise resilience to disruptive events. It can give you critical insight to inform your strategic decisions, as you grow as a global business.