Several recent natural disasters have forced some of our North America clients to curtail their business operations.
In California, the public utility cut power to a million properties. Pacific Gas & Electric adopted these measures during a severe drought, to keep damaged powerlines and transformers from sparking flames and more fires.
A customer in South Carolina was forced to close their plant during the past hurricane season. Winds, rain and the risk of flooding forced the evacuation.
In Texas, a power generating station was flooded by an extreme storm event, cutting electricity to consumers for many days. In Ontario a sub-station was flooded, also cutting power from the grid. Our customers in both jurisdictions were among those affected.
The 2015 Ft. McMurray wildfire forced the evacuation of a site and the termination of a customer’s operations for many weeks.
As we reflect on the experiences of our clients in coping when disaster strikes, we’ve learned some lessons:
1. The probability is increasing that severe weather events will negatively impact business operations.
Extreme weather is not new. However, according to the Insurance Bureau of Canada, extreme weather events are increasing in frequency and severity. This suggests that in the coming years, more companies will experience weather related business disruptions.
2. Businesses need to take the risk of natural disasters seriously and make preparations.
Traditionally, fires, floods, hurricanes and the like have been considered “Acts of God” – disasters that happen but can’t be predicted. We react to these events when they occur. Knowing the events will be more likely, it makes good sense to plan ahead.
3. Consider on-site, back-up generation in anticipation of power disruption from the grid.
A storm can affect a large area. Hurricane Dorian in Nova Scotia and the ice storm in Manitoba this fall resulted in wide spread power blackouts. On-site generation can keep critical functions running at a site or business until power is restored.
4. A business disruption plan needs to include robust communications.
It takes thoughtful effort to manage the temporary closure of operations, as well as to resume operations. Evacuating a site is only one of many steps that need to be addressed. Being able to communicate with personnel is crucial throughout. What happens when cell towers are knocked out of operations? Internal communications, if reliant on mobile phones, need to have back up plans.
5. The recovery can take longer than anticipated.
The Intact Centre for Climate Adaptation at the University of Waterloo has published a study analyzing the long term impacts on employees who have experienced flooding. The costs to an employer can include the lost productivity from absenteeism while employees restore order to their homes and lives. An employer needs to be mindful that the stress can impact their employees’ mental health for years after the event.
As an energy consultancy, our work at 360 Energy is expanding in breadth and scope. For decades, we have been advising our customers on their energy consumption and costs, and ultimately how they can save on energy. Our relationships with many long term customers have helped us recognize an emerging need. Growing numbers of our customers are having to manage the impacts of severe weather events on the reliability of their power supply and on their business continuation.
We are recommending that our customers make contingency plans for energy reliability, availability and price risks. Changing weather and climate patterns can have negative effects. The insurance industry is learning this. Successful businesses should follow suit and take steps to adapt.