A year doesn’t go by in New Zealand without some kind of natural disaster. Flooding, earthquakes, tornadoes—all we need is for Rangitoto to erupt, and we’ll have the full set.
But despite the huge amount of damage that these disasters can inflict on the nation and its economy, many businesses wait until they’ve already been affected before they start developing a comprehensive business continuity and disaster recovery plan.
It’s concerning that so many small businesses, which are integral to the economy of New Zealand, don’t seem to be taking the possibility of such events seriously.
Direct effects on business
Take the recent Tasman Tempest for example. This ‘weather bomb’ hit Auckland and the Coromandel mid-way through March 2017—one of several that have struck New Zealand in recent months—causing flooding that crippled many homes and businesses.
Among the heavily damaged businesses was West Auckland’s purported only nightclub, Club Fiafia. The damage was so severe that the Probett building, which housed the club, needed to be partially demolished. In a single disastrous event, an entire business was shut down.
"Many people think 12 months is a long time and they could get back up and going easily in this time frame. Claims experience tells us that often this is not the case."
They say that a little rain never hurt anybody, but in the case of the Tasman Tempest, it was a month’s worth of rain in 24 hours, and caused over $13 million of insured damage in total. And it isn’t the only example of its kind in recent memory.
Would you be able to rebuild your business if something similar happened? Could you afford to construct new premises, or find a new, long-term lease in enough time to prevent too much business interruption?
“Many people think 12 months is a long time and they could get back up and going easily in this time frame. Claims experience tells us that often this is not the case and things take a lot longer than you expect,” BRAVEday Principal Kane Butler explains.
Indirect effects on business
Speaking of business interruption due to disasters, it isn’t just the direct damage that you need to worry about either. Natural disasters, big and small, can cause a whole raft of problems for your supply chain and general business operation.
Natural disasters, big and small, can cause a whole raft of problems for your supply chain
The Kaikoura earthquake, for example, had obvious effects on local businesses. There were over 2,500 commercial claims made, amounting to $900 million in February and likely to grow further as more claims are processed. But this huge event, which was felt as far as Auckland, had ripples that impacted businesses who were miles from the epicentre of the quake itself.
The extensive damage to the rail and road system disrupted transport and travel between the North and South Island—and considering that 98 per cent of our freight goes by road or rail, you can bet that impacted business supply chains all over the country.
Key takeaways
There are some dire warnings about disaster preparation, but you can also be proactive in preventing the damage before it affects your business.
The first step should be to develop a business continuity plan. You can get the details here and a template here. Here’s a quick summary:
- Identify your core product/services and the people, equipment and supplies which enable them.
- Develop a plan that allows you to use different people, equipment and supplies to fulfill your business goals, or if that isn’t possible, identify the means by which you can get these essential factors back online ASAP.
- Keep critical records/data in an off-site backup and/or on the cloud.
- Share this plan with your key stakeholders and practice the plan with your staff to identify any weak points in case of real disaster.
This plan also makes special mention of insurance: sometimes, no matter, how well you plan for a disaster, you can’t mitigate all the damage. That can impact your business finances in a significant way—so ensure that you have the right protections in place. In this case, that would be disaster insurance, or a more general business continuity insurance.
Disasters are a common occurrence in New Zealand. But they don’t need to be the end of your business. Identify, implement, plan and prepare, and remember: even if you aren’t in the impact zone, you’ll still be affected by a significant disaster elsewhere in the country.
For more information, check out our business insurance guide below.
