Australia’s spring and summer seasons are expected to be challenging, with the Bureau of Meteorology forecasting an increase in extreme weather events.
The forecast is for heatwaves, bushfires, and storms, with particular concern for floods in Tasmania and bushfires in Victoria and South Australia. The National Emergency Management Agency has been refining its program in the light of the forecast, especially since October to April is already a higher-risk period for extreme weather events.
These weather extremes are more than inconvenient. They also pose serious risks to businesses, affecting day-to-day operations to long-term viability and everything in between.
Will Your Business ‘Weather’ the Seasons?
Extreme weather can disrupt business operations, particularly those that rely on supply chains. Agriculture, retail, and logistics sectors are most vulnerable, with transport disruptions leading to delays or damages.
Additionally, energy infrastructure could be compromised, leading to power outages that could disrupt production and services. If a workplace becomes unsafe because of a storm or fire, employees’ safety may be at risk, resulting in costly compensation claims or shutdowns.
Planning & Risk Minimisation
Preparing for extreme weather starts with a robust business continuity plan (BCP). Identify the critical parts of your business that need to stay operational, such as customer service or logistics. If necessary, dust off your systems for remote work. Another important resource is having backup power supplies to keep your business running during blackouts.
Also, check your physical infrastructure is in good conditions:
- Secure your buildings
- Identify and deal with fire hazards, and
- Prepare drainage systems for heavy rains.
Invest in safety training for your staff so they know what to do if there’s a flood, fire, or other extreme conditions.
And, check your state or territory’s emergency warning app, like this one for Victoria, to stay informed about upcoming extreme weather events.
Insurance as a Key Risk Management Tool
One of the most powerful tools in your risk management toolkit is customised insurance coverage.
From business interruption to property and disaster-specific policies like flood or fire coverage, a package of best-fit policies will help mitigate the financial impact of weather-related disruptions.
As your broker or adviser, we can help you review your insurance policies and ensure they are up-to-date and meet your needs and requirements. If you have expanded your operations or invested in new equipment, you may need to adjust your coverage. It’s important to address these changes now, rather than waiting until after a disaster strikes and facing the risk of being underinsured.
Diversifying suppliers and developing contingency plans can help your business navigate through a crisis. Natural disasters often disrupt supply chains, placing you in a tight spot if you lean on one or two suppliers. Minimise these risks by building strong relationships with a wider network of suppliers.
Discuss emergency plans with your logistics partners sooner rather than later. This will ensure that you can collaborate with your logistics partners to continue delivering to your customers. Questions to ask those in your supply chain include:
- Have you conducted a risk assessment to identify potential vulnerabilities in your supply chain related to extreme weather?
- Do you have alternative suppliers or sourcing options to minimize disruptions?
- How do you plan to transport goods during extreme weather when roads may be closed or transport is disrupted?
- Do you have business interruption insurance to cover lost income and expenses during disruptions?
- Do you have cybersecurity measures and cyber insurance to protect your data and systems in case of a cyberattack during or after a disaster?
Climate Adaptation for Business Sustainability
As extreme weather events become more frequent, businesses must proactively address climate risks. Sustainable practices can minimise your risks and buffer against the financial impact of disasters. Consider these bite-size actions:
- Identify areas of your business where you can reduce energy consumption
- Replace traditional bulbs with energy-efficient LED lighting
- Set up recycling bins and educate staff on proper waste segregation
- Choose durable materials and smart design for new construction or renovation projects
- Monitor water usage – install water-saving fixtures and regularly check for leaks
- Reduce the carbon footprint of your business
- Implement energy-efficient practices to cut operational costs and carbon emissions
- Adopt recycling and waste reduction strategy to decrease your environmental impact
- Conduct assessments to identify specific risks related to your business location and industry then create tailored plans to adapt
In the tourism sector, for example, climate-related events have significantly disrupted operations. The threat of climate change to Australian tourism highlights the importance of forward-thinking risk management across all sectors. Check out AdaptNSW, the NSW Government’s official site to advise businesses on adapting to climate change.
In the tourism sector, for example, climate-related events have significantly disrupted operations. The threat of climate change to Australian tourism highlights the importance of forward-thinking risk management across all sectors. Check out AdaptNSW, the NSW Government’s official site to advise businesses on adapting to climate change.
By being proactive, you can ensure your business is prepared for whatever the weather throws at you this spring and summer. There are three things you can do now:
1.
Review your insurance policies
2.
Update your BCP
3.
Review your risk management plans and conduct scenario testing for key risks ensuring that your staff & business are ready to respond in the event of a disaster.
By working closely with us as your insurance broker or adviser, your business can develop tailored risk management plans to safeguard operations and financial stability.