A 10-step guide for companies to minimize the impact and disruption of climate events. Includes the Do’s & Don’ts to Prevent, Prepare, Plan & Monitor when facing a difficult environmental incident.
Downtimes and disruptions are a fact of life in today’s global economy. Businesses across the globe face increasing risks due to extreme weather events. According to research, severe weather disruptions cost US businesses an estimated USD$630 billion yearly. And the majority of this damage is caused by flooding and storms resulting in power outages and delayed shipments.
However, there are ways for companies to mitigate these risks. This article will look at how businesses can devise solutions to minimize disruption by first understanding what causes them. Then it will discuss the steps they need to take to protect their operations.
What Are Extreme Weather Events?
Hurricanes, floods, droughts, heat waves, and blizzards are becoming more frequent and intense. The frequency of these severe weather events has increased over the last few decades. In addition, climate change is expected to increase the intensity of these events.
Severe weather conditions have become so common that many people don’t even think about them anymore. However, they still pose serious threats to communities and economies. For example, Hurricane Katrina was one of the most destructive natural disasters ever recorded, costing approximately USD$161 billion.
How Do These Events Impact Businesses?
Businesses are often unprepared when faced with extreme weather events. This lack of preparedness leads to significant losses and costs, including:
- Loss of productivity
- Damage to property
- Health impacts
- Insurance claims
These numbers only reflect direct damage. They do not include indirect effects on businesses, such as lost sales, missed opportunities, and reduced customer satisfaction. Additional costs are also associated with repairing or replacing damaged equipment, buildings, and infrastructure.
Why Is Business Preparedness Important?
Businesses must be prepared to deal with extreme weather events because they are increasingly likely to occur. Climate change impacts the frequency and severity of extreme weather events worldwide. As the number of extreme weather events increases, so does the risk of losing revenue and damaging your company’s reputation.
Preparedness is important because it helps you avoid costly mistakes. It allows you to minimize the time and resources needed to recover after a disaster strikes and gives you peace knowing that if something happens, you have taken all necessary precautions to ensure that your business remains operational.
How Does Business Prepare?
People around the world have been affected by severe weather events over the past few years, and businesses are no exception. But here are steps business owners can take to minimize the impact of extreme weather events on their operations.
Businesses should consider the following strategies for mitigating the risk of severe weather disruption:
1. Plan For Preparedness
Planning will help you prepare for any potential disruptions caused by extreme weather events. By this, you can reduce your exposure to losses due to extreme weather events.
For example, if you know there’s a chance of heavy rain during an upcoming event, you may want to move some inventory from your warehouse to another location. You could also plan to close early or extend hours to accommodate customers who might need to reschedule appointments.
2. Secure Your Inventory
Inventory loss due to extreme weather events can be catastrophic. To avoid this problem, you must secure your inventory against damage caused by extreme weather events.
One way to secure your inventory is to buy or rent climate-controlled warehouses. Climate-controlled warehouses maintain a consistent temperature throughout the year. They also protect your inventory from extremes in temperature and precipitation.
Another option is to store your inventory in a location protected from flooding and hurricanes. If you live near an ocean, consider choosing a distribution warehouse located inland. Or, if you live near a river, consider storing your inventory in a warehouse away from flood zones.
3. Implement Emergency Plans
Once you’ve identified your risks, you’ll want to implement emergency plans. The best emergency plans are those that address multiple types of disasters. For example, if your business has employees who work remotely, you may want to develop a plan that addresses natural disasters like floods and human-caused disasters like fires.
If you don’t have enough staff to cover shifts when extreme weather disrupts normal business operations, you may want to train existing employees to handle emergencies. It can include training them to perform tasks like monitoring critical equipment and communicating with customers about service delays.
4. Invest In Technology
Technology is indispensable in helping you manage the risks posed by extreme weather events. For example, you may want to use software that tracks inventory levels, monitors employee performance, and communicates with customers.
Technology also helps you prepare for the consequences of sudden power outages. For example, you can use solar panels to generate electricity during low sunlight periods. And you can use battery storage systems to keep your business running even after a power outage.
5. Build A Resilient Business Model
You should build resilience into your business model. It means ensuring your business has enough cash flow to sustain itself through periods of disruption. It also means having access to sufficient resources to recover quickly once the severe weather passes.
For example, in a supply chain management system, you may want to set up a reserve account that allows you to pay suppliers without incurring additional costs through credit card processing fees. Similarly, you may want to establish contingency funds to make payments on outstanding invoices.
6. Communicate With Suppliers
Communication is key to mitigating the risks associated with extreme weather events. In particular, you need to be able to communicate effectively with suppliers.
Suppliers often rely on email or phone calls to communicate with their clients. But this method of communication isn’t reliable during times of extreme weather. Instead, you may consider using alternative methods such as text messaging.
The key here is to find effective ways to communicate with suppliers regardless of whether there’s a power interruption or not. You can accomplish this by setting up automated alerts that notify you whenever there are changes in supplier activity.
7. Consider Hiring Outside Help
Severe weather conditions can cause significant damage to your business. You may not be able to restore your business to its previous level of operation. In these cases, you might have to hire outside help.
For example, you may want to outsource help to clean up debris left behind by storms. Or, you may want to outsource to provide temporary staffing services while recovering from a disaster.
8. Be Prepared For Recovery
After a storm or other event causes severe disruptions to your business, you must be prepared for recovery. For example, you need to identify key personnel who will take over day-to-day operations. You also need to identify key vendors who will continue providing goods and services to your business.
9. Monitor Your Disaster Response Plan
To ensure that your disaster response plan is effective, you need to review it regularly. It includes reviewing the following:
- How well does it address all potential threats?
- Does it address all possible scenarios?
- Is it updated frequently?
10. Keep Records
Records are an essential part of any disaster response plan. They help you document what happened, how you responded, and what lessons you learned. In addition, they help you prove that you followed best practices when responding to a disaster. And lastly, there’s room for improvement in your documented or recorded events after you have studied and watched them. So, in next emergencies like weather disruptions, you can elevate your plans to protect your business from possible damage caused by sudden events.
The Don’ts Of A Disaster Management Plan
Aside from the ten things you must do to mitigate the risk of severe weather disasters, there are some things you shouldn’t do. Here are the top six things you shouldn’t do if you want to avoid disaster:
Don’t Ignore The Warning Signs
Ignoring the warning signs of a severe weather event might cost you greater losses than those caused by the storm itself.
Don’t Wait Until It’s Too Late To Prepare
Preparing for the worst-case scenario is always a must. That means preparing for hurricane season even though you know hurricanes aren’t likely to occur yet is a must.
Don’t Forget About Insurance
Insurance is another critical part of any disaster management plan. Without insurance, you could suffer financial losses that exceed the cost of the repairs needed after the storm.
Don’t Rely On One Source Of Information
When planning for a disaster, you should use multiple sources of information. These include government agencies, local media outlets, and private industry associations.
Don’t Fail To Protect Your Employee Safety
Lastly, above all else, you should protect your employees’ safety during a severe weather event. If you fail to do this, you could lose more than just money. You could lose your human resources, making it difficult to recover from a disaster. More than anything, your employees are your company’s greatest asset. They’re the ones who will help you get back on track once any storm (literal and metaphorical) has passed, so protecting them is critical.
Severe weather events can disrupt your business. However, you can reduce the impact of such events on your business by taking action before, during, and after a storm.
Some managers often overlook the importance of having a disaster management plan in place. But without a plan, you might not be ready for the unexpected. So, make sure to follow these tips to protect your business against severe weather conditions.