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British businesses count cost of cold snap
Written by staff reporter
The British weather – in particular heavy snow – continued to catch UK businesses by surprise in 2012, according to new research released by the Chartered Management Institute (CMI). Bad weather is revealed as the top cause of disruption to UK businesses over the last 12 months, with as many as 77% of organisations affected by this winter’s snow.
The report reveals that the most common snow-related disruptions were travel and childcare issues stopping staff from getting to work. Some three in five organisations suffered financially as a result, with managers estimating the average cost to their organisation in excess of £52,000, and some going as high as over £1 million, according to the research published in association with the British Standards Institution (BSI), the Business Continuity Institute (BCI) and the Cabinet Office.
Weathering the Storm explores how prepared businesses are for disruption and the steps being taken to mitigate those risks. It shows that extreme weather is increasingly hampering organisations: a decade ago, it interfered with just 15% of businesses over a year, rising to 29% five years ago and 49% last year.
Despite this, many businesses still underestimate the risk that extreme weather – including snow – can pose. Despite being the top cause of business disruption for three years running, the weather barely makes the top ten when managers are asked to predict which threats are most likely to disrupt them in the future. However, it is clear that business continuity arrangements help reduce snow disruption; 90% of organisations with plans were ready for this year’s snowfall, compared to two thirds (68%) of those without.
Ann Francke, chief executive of CMI, says of the findings: “Snow in the UK is hardly unusual – yet too many businesses are allowing it to hit them hard. The results are clear – your business will cope better and recover faster if you plan ahead. Managers that don’t are left counting the cost in lost business, damage to customer trust and reputation.
“It’s great that more businesses are using business continuity management, but too many are shutting the stable door after the horse has bolted. A key part of any manager’s job is making sure that the business keeps running, come what may – and that means planning proactively. With the recent snow alone costing organisations an average of over £52,000, those that do prepare have a competitive advantage and a real edge when it comes to building their customers’ trust.”
The research identified the biggest business impacts of disruption as reduced revenue, damage to reputation and lost new business opportunities. It suggests organisations are increasingly turning to business continuity management to insure themselves against these risks – 63% now have arrangements in place, up from 61% last year and 58% in 2011.
The report makes a clear business case for business continuity management as a cost-effective way to minimise disruption:
•86% of managers believe planning improves business resilience
•74% agree it protects reputation
•87% of those activating their business continuity arrangements said it effectively reduced disruption
•81% say any cost of developing plans is justified by the benefits it brings
With the horsemeat scandal continuing to hit business reputations, CMI and its partners are also warning organisations not to forget their supply chains when it comes to business continuity planning. Less than one in 10 businesses with business continuity plans in place for their own operations (seven per cent) expect the same of their suppliers and just three per cent see this changing in the future.
To improve management and leadership CMI and its partners are calling for businesses to integrate its top five ways to protect operations into their planning:
•Prevention is better than cure. Experiencing an emergency is the second biggest driver of planning, but by then the damage is done. Don’t wait until the worst happens before getting a plan in place.
•Practice makes perfect. Organisations change rapidly, so review and test your plans regularly to check they meet current business needs.
•Think beyond your own operations. Work out who your key suppliers are how disruption among them would impact your business. Do they have business continuity management? If not, find out why and push them to change this.
•Use set standards. The best business continuity plans are based on common frameworks. Use established standards such ISO 22301 (which has superseded BS 25999) to ensure your plans follow recognised best practice.
•You don’t have to go it alone. The causes of disruption evolve all the time and getting a comprehensive plan in place may seem daunting. The BCI is this week promoting business continuity management via 'Business Continuity Awareness Week', which runs from 18-22 March.
Anne Hayes, head of market development, BSI Standards, said: “Today there is an even greater need for good business continuity practices to alleviate the negative impacts of unpredictable scenarios, such as adverse weather conditions or supply chain issues. Having an agile approach in response to such circumstances is crucial so that reputations remain intact, disruptions are minimized and risk is reduced. Adopting a business continuity management (BCM) standard such as ISO 22301 helps organisations to safeguard their business by taking a proactive and preventative attitude.”
Lyndon Bird FBCI, technical director, the BCI, says: “The research findings confirm that extreme weather has become more consequential for businesses over the past decade, while disruption through cyber-attack still barely registers as an issue among general managers over the past three years. One specific area where improvement can be made is on awareness raising – still more than 50% of managers are not fully familiar with their organisation’s business continuity arrangements. We hope managers will take the opportunity of Business Continuity Awareness Week to learn more about their role in helping their organisation become more resilient.”
Campbell McCafferty, director, Civil Contingencies Secretariat at the Cabinet Office, says: “We are heartened that this report shows just how valuable business continuity planning can be. Yet it also highlights that many companies, particularly smaller ones, remain vulnerable to disruptive events. Business continuity planning helps companies continue trading when a disruption does occur, and to recover more quickly, and it needn’t be onerous: the Business Continuity for Dummies guide gives accessible advice to those looking to improve their ability to weather any storm.”
Read the report in full at www.managers.org.uk/BCM2013