Inflation and Other New Economic Challenges Impact Disaster Preparedness

Dear ChicagoYou39re right to be concerned If your business were to suffer a physical property loss due to a fire or a weatherrelated event you might find yourself quotdownquot for much longer than originally anticipated And the amount and type of insurance you purchased some time ago may no longer be enoughBusinesses need to be prepared for issues like increased inventory cost and property valuations higher replacement costs and the potential for extended repair timesThe ongoing supply chain disruptions have resulted in higher prices for goods including building materials Workforce shortages and increased demand for services have compounded and prolonged the time to repair or replace propertyThankfully there are three steps businesses can take to help protect themselves from such risks prevention planning and programsPrevention The time to identify and mitigate potential risks and exposures is before losses occur This may include implementing capital improvement projects such as replacing roofs and installing water monitoring and detection devices as well as other preventative measuresA wellrounded riskmitigation plan includes a variety of strategies For example IOT safety devices such as water monitors or detectors can help identify issues before they cause larger problems including downtime due to damage and the consequential productivity and revenue lossPlanning Business continuity and emergency response planning in advance of potential emergencies is key This helps get companies back up and running faster It39s essential to build strong business continuity plans and review them regularly They should provide the framework for the full operational and financial recovery of a company following a lossThe business continuity plan should consider the potential impact of inflation on the cost of repairing and replacing property and inventory Build in supply chain redundancies to minimize disruption in the event of loss This should include vetting alternate suppliers and thirdparty vendorsEmergency response plans are also necessary to help businesses respond to a variety of possible events including an accident or incident service outage weatherrelated event or natural disaster Identify appropriate responses and actions for each of these possibilities including chain of communications internally and externally Staff should be assigned responsibilities and trained accordingly The plans should be rehearsed and tested periodically and updated regularlyPrograms It39s also wise to reassess your property insurance programs including the terms of coverage and limits Five years ago a 10 million limit may have sufficed but that amount would likely need to be higher today for the same property The last thing any company wants is to suffer a 15 million loss while carrying a 10 million limitIt is important for companies to revisit asset valuations including inventory to make sure they are on par with current replacement costs Considering today39s inflationary economy a reevaluation may be in order Work with your insurance agent broker and carriers to assist with and help inform your decisionmakingAll companies need to understand how much insurance is needed to deter a financial calamity An experienced insurance broker or agent can help determine whether to assume more risk internally by maintaining insurance with a higher deductible Or a business may decide to take on added selfinsured risk at the top end of a loss via lower insurance limits or assume greater risk by increasing the waiting period for a business interruption loss to triggerInsurance agents or brokers can discuss ways to help assess and potentially reduce the cost of a business39s risk byProactively identifying potential risks and mitigating exposuresDeveloping or reviewing comprehensive emergency and business continuity plans to help respond and recover following an insured lossImplementing appropriate risktransfer mechanisms to ensure a company39s insurance program includes the right balance and mix of policies accurate valuations limits and deductibles to current and evolving needsEvery business39 risk profile and risk tolerance are different and they39re often evolving in response to market opportunities and pressures Those in the media business are certainly no exception By carefully planning for future disasters and bearing in mind the new economic realities companies can avoid a world of pain down the road And while it still might not be pleasant the situation will be a lot more manageableMaxime Lefebvre is Senior Vice President Entertainment at the global insurer Chubb David Blevins is Executive Vice President Commercial Insurance Property Manager at Chubb They can be reached at infomediavillagecomClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

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Inflation and Other New Economic Challenges Impact Disaster Preparedness

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Inflation and Other New Economic Challenges Impact Disaster Preparedness

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