Bad weather at the heart of business anarchy, study finds
Bad weather is the top cause of disruption to UK businesses over the last year, with 77 per cent of organisations affected by this winter's snow.
That's according to research released today by the Chartered Management Institute, which shows that managers are estimating the average cost to their organisation to be in excess of £52,000, and some going as high as more than £1 million, according to the report 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 per cent of businesses over a year, rising to 29 per cent five years ago and 49 per cent last year.
Yet, worryingly, 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 10 when managers are asked to predict which threats are most likely to disrupt them in the future. However, it's clear that business continuity arrangements help reduce snow disruption; 90 per cent of organisations with plans were ready for this year's snowfall, compared to two thirds (68 per cent) of those without.
Speaking about the findings, Ann Francke, chief executive of CMI, said: "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 per cent now have arrangements in place, up from 61 per cent last year and 58 per cent in 2011.
The report makes a clear business case for business continuity management as a cost-effective way to minimise disruption:
• 86 per cent of managers believe planning improves business resilience
• 74 per cent agree it protects reputation
• 87 per cent of those activating their business continuity arrangements said it effectively reduced disruption
• 81 per cent say any cost of developing plans is justified by the benefits it brings
Lyndon Bird FBCI, technical director of the Business Continuity Institute, said: "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 raising awareness - still more than 50 per cent 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."