Natural disasters are catastrophic events that result from processes that occur without human intervention. These adverse events include avalanches, landslides, earthquakes, and volcanic eruptions. Floods, tsunamis, blizzards, and wildfires belong to this category as well. It is worth noting that the occurrence and intensity of natural disasters vary from country to country. Natural disasters have a significant impact on the economy and the businesses in more ways than one. Read on to know more about the impact of natural disasters on businesses:
1. Supply Chain Disruptions
Efficient and reliable supply chains are critical to the success of a company. For example, the constant supply of milk is vital to the operations of a cheese-making factory. Unfortunately, natural disasters interfere with these supply chains because they affect roads, bridges, and airports.
More specifically, roads become impassable, bridges collapse, and airports remain closed. That means moving goods and services in affected areas is impossible. In the case cited above, the factory would stop its operations because it cannot produce cheese without receiving milk from its suppliers.
2. Communication Barriers
These barriers result from panic and the loss of communication infrastructure. Remember, business continuity plans are critical because they limit mass hysteria. This hysteria hampers communication because everyone is busy trying to save his or her life.
The loss of communication infrastructure has an impact on the business as well. Unlike mass hysteria which lasts for day or two, this problem persists for weeks in extreme cases. It occurs when natural disasters destroy power stations, cell towers, and optical fiber lines. That means communicating with your staff through calls, text messages, or social media is difficult or impossible.
3. Damaged Buildings
Wildfires in Northern California destroyed 8,700 buildings in October 2017. Many of these buildings were business premises. For example, the fires had damaged 23 commercial properties in Sonoma and Napa by October 11, 2017. These properties included the Signorello Estate and the Hilton Sonoma Wine Country. The Hilton Sonoma Wine Country Hotel had enough accommodation for 250 people at the time.
However, it closed down temporarily to prevent further damage to the property in addition to promoting the safety of its patrons. This example shows that natural disasters cause significant damage to commercial buildings leading to repair costs and loss of revenue.
4. Loss of Equipment
Businesses have different types of equipment depending on the products they offer and the scale of their operations. For example, tractors are an essential piece of equipment on any farm. Office equipment such as printers and photocopiers are critical to business operations as well.
Unfortunately, natural disasters affect them adversely. These disasters cause damage to office cabinets, chairs, and tables as well. The cost of replacing these damaged items again be crippling for many businesses. That is especially true if they do not have access to government loans or grants.
5. Loss of Personnel
Regrettably, people lose their lives during natural disasters. For example, 1,833 died because of the flooding that Hurricane Katrina caused in New Orleans and other parts of the Gulf Coast. Many of these people were employees at various companies across the State of Louisiana. Some of them even came from neighboring states. Consequently, businesses lost employees because of this Hurricane.
Some of the workers in the affected areas suffered from injuries as well. Others decided to migrate to other parts of the US. Businesses also found it hard to hold on to employees when profits were low because of a depressed local economy. That shows you that natural disasters lead to the loss of personnel in multiple ways.
6. Loss of Clientele
Natural disasters lead to the loss of clientele as well because people move away from the affected area. It is worth noting that the ones who remain often spend their money on rebuilding their homes and businesses. That means specific establishments such as entertainment spots will see a drop in the number of patrons visiting them. Damaged goods are also another consequence of natural disasters for many companies.
For example, it happens when fires burn existing stock or floods immerse them in water. Preventing these consequences and the ones mentioned above is possible if you have a business continuity plan. Some of the measures in this plan should be relocating stock before a disaster hits and enhancing communication while it is ongoing.
About the Author
Leona is part of the content and community team at Specialty Fuel Services – providers of emergency fuel continuation services, in locations affected by catastrophic events.