February 3, 2016
Can Your Company Survive a Business Interruption?
According to Allianz Risk’s Barometer, business interruption is the top risk for companies in our “increasingly interconnected and globalized business environment.” Their most recent study, looking at data between 2010 and 2014, shows incredible business interruption losses.
Top Causes of Business Interruption Losses
- Fire and explosion
- Machinery breakdown
- Faulty design/material/manufacturing
- Cast loss (in entertainment sector)
- Human error
- Power interruption
The average loss for a large business interruption insurance claim is $2.38 million dollars.
Many of these causes are not uncommon, but the need for insurance in the event of a catastrophic loss is absolutely necessary to avoid loss of business. Not being prepared for the worst can also cause mistrust in business-to-business transactions. You can read more about business insurance here.
Not all catastrophes are as obvious as fires or machinery breakdown. In an ever-expanding global market and cyber world, there are other things to consider when insuring your company in the event of business interruption.
Because of manufacturing shifts to China and other South East Asian countries, there is an increase in interdependencies. For instance, when an overseas manufacturer suffers a loss, the companies who contracted them may also see an interruption in their business – especially if they keep minimal stock warehoused. When one company’s success is contingent on another, there is vulnerability.
Non-Damage Business Interruption
Cyber attacks are a real problem, and it is expected to continue to increase over time. The impact of the “Internet of Things” can be seen in the automation within supply chains. These wireless activities are extremely efficient, but can be a weakness that cyber criminals target. Read more about cyber threats here.
Having a Business Continuity Plan is crucial to your business’ survival when disaster strikes. A properly balanced plan includes not only the steps you need to take in the aftermath, but also anticipates the financial impact on your business. Much of this impact can be reduced by taking precautionary measures now and carrying adequate insurance. For more information on Avalon’s comprehensive Business Insurance plan, contact firstname.lastname@example.org or visit our Business Insurance page.