Firms complacent about risk of climate disasters

2006

British businesses are remarkably complacent about the risk of flooding and other climate-related disasters, even those that are located in high-risk areas, new research has found.

Seven out of 10 small businesses in high-risk areas said they were unconcerned about flooding and nine out of 10 failed to insure adequately against climate risks, said the survey by insurer AXA.

Fewer than one in three had a contingency plan to cover business interruption and just 8 per cent of businesses in flooded areas received any form of flood risk warning.

Only one in four businesses in flood risk areas perceived climate change as a real threat to their business.

Businesses expected to recover from flooding within one month, but in reality the average recovery took more than two months, the survey also found.

The average claim for business interruption soared by almost 60 per cent in the four years to 2005, AXA also reported.

Average flood damages for UK businesses could increase to between £5.5bn and £42bn each year by 2080 and around a third of these losses would be from urban drainage problems, the survey suggested.

Peter Hubbard, chief executive of AXA Insurance UK, said: "SMEs are the backbone of our economy, employing some 12 million people.

"Climate change poses a real threat to their existence and this is a problem that to a great extent has been overlooked," he added.

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