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Tuesday, August 15, 2023

Will Climate Change Break Your Business?

By Catherine Powell

Image courtesy Pxfuel

As I stand here looking out my window at the thermometer in my garden, the temperature reads 100 degrees.  While temperatures in the mid-90's aren't unusual in Florida during the summer, having them reach triple digits is.  And it isn't only here that record temperatures have been occurring this summer.  The World Meteorological Organization recently proclaimed July 2023 as being the hottest month ever recorded in human history.   The unrelenting heat wave has been spawning wildfires galore, as well as unusually powerful storms that are causing hail and flood damage in many parts of the globe.  This recently caused UN chief Antonio Guterrez to state, "The end of global warming has ended; the era of global boiling has begun."  While climate change can disrupt lives, it can also throw a monkey wrench into most businesses.  If you own a business and you want to know how to defend your enterprise against the ravages of climate change, see my top-10 list below.

1. Property Damage - Here's a multiple choice question.  What kind of property damage is worse for a business, fire or flood?  It's actually a trick question, since either can wreak havoc with a business.  Watch any nightly newscast and you'll see floods inundating places like Connecticut, New Jersey, New York, and Vermont.  The next night you'll learn about wildfires in Arizona, California, Hawaii, and Texas. Extreme heat has been blanketing much of the country this summer.  NOAA estimates that 15 weather disasters have already occurred in the US this year each of which cost at least $1 billion.  Those who were unprepared were among the hardest hit by these calamities.  Have you inventoried your business furnishings and inventory lately?

2. Weather-Related Disruptions - If climate-induced fires and floods aren't the only weather-related causes of business disruptions.  Hurricanes, tropical storms, and severe thunderstorms have historically created some of the longest lasting disruptions to business since they can knock power out for days or weeks at a time in a stricken area.  Anyone who lives in Florida prepares contingency plans every year in case their home or business is forced to endure an extended power outage. However, in many parts of the country where seasonal disruptions caused by weather gone wild is unusual, many business owners aren't prepared to weather the storm.  FEMA reported that upwards of 40% of businesses do not reopen after a natural disaster.  Now is the time to formulate an emergency disaster plan that will allow your business to survive the worst that Mother Nature can throw at you.

3. Transportation Interruptions - Another thing that can quickly be derailed after a natural disaster is the local transportation grid.  Planes, trains, and trucks can find it impossible to make scheduled deliveries to areas that have experienced a natural disaster.  Do you know how long your business can continue to operate if you rely on supplies that need to be delivered on a regular basis?  Does your business have emergency supplies stockpiled in case of a transportation meltdown?

Image courtesy Pixabay

4. Global Supply Chain Curtailment - Sometimes the pinch point in the supply chain isn't local but global.  Have you ever considered what would happen if any of your suppliers were caught in the crosshairs of a natural disaster, like the biblical flooding that recently occurred in China?  Diversifying your supply chain sooner rather than later could be the key to continuing business as usual should any of your suppliers be damaged or destroyed by a climate catastrophe.

5. Temporary Closures - Do you realize there are 5 things that can cause your business to close temporarily that are beyond your control?  Fire, flood, power failure, pestilence, and service disruptions can derail any business for days or weeks after a natural disaster.  Any of these can cause a domino effect that can cost your business revenue that you may not be able to recover from any time soon.  If you're forced to close your doors for a time, how long will you be able to sustain your business and pay your staff before you'll have to close your doors for good?  Do you have any alternatives in place that will allow your business to pivot to other sources of income?  Are you insured against business interruptions?

6. Reduction in Foot Traffic - Even if your business escapes unscathed after a natural disaster, have you considered what would happen if local foot traffic slowed to a crawl?  The recent COVID-19 epidemic is a perfect example of an unprecedented event that had a devastating effect on businesses that relied on foot traffic.  Many were forced to pivot in order to stay afloat, while others didn't survive the extended disruption that the outbreak caused.  Have you considered alternative methods of conducting business if foot traffic dwindled for an extended period of time?

7. Increased Liability - Natural disasters don't just affect revenue, they can also affect those who visit or work in any business.  Weather-related events can increase the odds of customers or employees getting injured while under your roof.  Everything from wet floors to storm debris can increase your business' chances of being sued.  

Image courtesy Pxfuel

8. Decreased Productivity - Like it or not, the wrath of Mother Nature can slow your business to a crawl pretty quickly.  Even if your business doesn't lose power or face any outward signs of destruction, that doesn't mean your staff won't be affected by a natural disaster.  Just the threat of an imminent storm, flood or wildfire can dramatically alter your staff's ability to perform their duties.   If any employees have their lives turned upside down by a climate-related calamity, you could suddenly find your business shorthanded and struggling to maintain momentum.

9. Altered Buying Patterns - Another lesson many businesses learned from the COVID-19 crisis is that any alteration from the norm can cause customers to look elsewhere for products and services. Many retailers were particularly hard hit when customers suddenly switched from retail to 3-tail.  How diversified are your sales efforts?  

10. Increased Costs - Price gouging is always a possibility following a natural disaster.  Not only do issues of supply and demand cause costs to skyrocket, the ability of suppliers to resupply their own warehouses has been known to effect the supply chain as well as the price of goods and services.

What can you do to make sure your ship of commerce doesn't run aground due to climate change?

  • Understand your business' short and long-term needs and plan for the worst case scenario.
  • Train your staff to understand what needs to be done in the event of a business interruption. 
  • Take stock of business assets and inventory with a view toward sustainability.
  • Establish a connection with a temporary help service in case of sudden staff shortages.
  • Make sure you have sufficient property damage coverage to replace losses after a natural disaster.
  • Talk to your insurance agent to determine how much business interruption insurance you need to cover lost profits and business expenses in case of a climate catastrophe.
  • Assess potential liabilities that could occur after a natural disaster to make sure you carry sufficient coverage.
  • Look into acquiring flood and hurricane insurance if you live in or near a coastal area.
In short, if you want to keep climate change from busting your business, you need to think ahead to survive the wrath of Mother Nature.  (Check out the articles linked below to get a bead on potential risks.)

Catherine Powell is the owner of A Plus All Florida, Insurance in Orange Park, Florida.  To find out more about saving money on all your insurance needs, check out her website at

1 comment:

  1. The lead to the evening news during the past two months has seemed more like an episode of the Weather Channel. Every night they start with either wildfire or flood. I'll be glad when Autumn gets here.


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