resilience of smes against extreme weather bingunath ingirige, keith jones, gayan wedawatta and fuad...
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Resilience of SMEs against extreme weather
Bingunath Ingirige, Keith Jones, Gayan Wedawatta and Fuad Ali
CREW Final Conference, RICS, London25th November 2011
Making climate change real – lessons from SME’s
Background Theory
HouseholdsPolicy Makers
CommunityResilience
SME’s
Stake-holder
Vulnerability
ResilienceAdaptive Capacity
What do vulnerability, resilience and adaptive capacity mean to SME’s?
What affects a SMEs response to extreme weather events?
What can be done to better prepare SMEs?
Field study with SMEsQuestionnaire survey involving 140 SMEs
Conducted with the assistance of Federation of Small Businesses (FSB) Located in Greater London Top management of the SMEs as survey participants
Interviews with 12 SMEs Mainly focused on flood risk Majority were micro businesses (less than 10 employees) 4 had previously experienced a flooding event
Transport, Storage and Communica-
tion; 21%
Real Estate, Renting and Business Activities;
21%
Construction, 15%
Wholesale and Retail ; 14%
Education; 7%
Manufacturing; 5%
Other; 16%
Micro 84%
Small 13%
Medium4%
Past ExperienceSixty percent of respondents had experienced EWEs (2005 – 2009)Of these, 84% had experienced business disruption
Very few of these had implemented coping measuresProperty level coping mechanisms Other strategies for business continuity
Premises improvements 19% Business data backup system 23%Stock / equipment relocation 7% Business continuity plan 17%Flood defenses 3% Reviewing property insurance for EWEs 14%Relocation of business premises 1% Business interruption insurance 9%
Planning for supply chain disruptions 6%
Employe
e absen
ce
Loss
of sale
s/pro
duction
Lower
turnove
r
Disruptions t
o acces
s
Loss
of pro
ductivit
y
Damag
e to pro
perty
Supply
chain
issues
No effect
on the b
usiness
Higher
costs
Damag
e to st
ock/eq
uipment
Health
impact
sOther
0%10%20%30%40%50%60%
Perceptions of riskMany believed that EWEs did not pose a significant business risk
This belief was higher amongst those who had experienced an event
And that it is too costly and complicated to prepare for
They mainly relied on insurance to recover if an EWE affected them
Twelve percent did not expect assistance from anyone
Not Sign
ificant
No Future
Impact
Currently
Evalu
ating O
ptions
Too Costl
y
Too M
uch W
ork
Lack o
f Inform
ation
Too Complica
tedOther
0%
10%
20%
30%
40%
50%
60%
Total Sample Previously Affected
Insuran
ce co
mpany
Local
authorit
y
Emerg
ency
servic
es
Local
utility co
mpanies
Centra
l gove
rnmen
t
Trade a
ssocia
tion or other
business
network
Neighbour b
usiness
es
Envir
onment a
gency
Supply
chain
mem
bers / c
ustomers
0
20
40
60
80
Event
Heavy rainfall
(Flash) Flooding of w
orkshop/outlet
Consequences to the Business
6 Months without business
Damage to business premises
Damage to stock
Loss of customer base
Loss of trading/income
Cleaning and dehydration costs
Repair and restoration costs
Impact
Case studies of SMEs – SME4Affected by flooding, still no resilience measures except insurance
Stock relocation costs
Difficulties involved with assessing and claiming
insurance
Event
Heavy rainfall
(Flash) Flooding of w
orkshop/outlet
Consequences to the Business
3 Months without business
Damage to business premises
Damage to stocks and equipment
Loss of paperwork
Delay in supplying orders
Loss of trading/income
Repair costs
Increased Insurance premium
Loss of records
Complete damage not met by insurance
Impact
Case studies of SMEs – SME3Affected by flooding, implemented resilience measures
Case studies of SMEs – SME3Affected by flooding, implemented resilience measures
Event
Heavy rainfall
(Flash) Flooding of w
orkshop/outlet
Consequences to the Business
3 Months without business
Damage to business premises
Damage to stocks and equipment
Loss of paperwork
Delay in supplying orders
Loss of trading/income
Repair costs
Increased Insurance premium
Loss of records
Complete damage not met by insurance
ImpactResilience measures
Raised storage
Online data backup system
Event
Heavy rainfall
(Flash) Flooding of w
orkshop/outlet
Consequences to the Business
3 Months without business
Damage to internal premises
Delay in supplying orders
Loss of trading/income
Repair costs
Increased Insurance premium
ImpactResilience measures
Online data backup system
Flood barrier
Case studies of SMEs – SME3Affected by flooding, implemented resilience measures
Raised storage Damage to stocks and equipment
Loss of paperwork Loss of records
Complete damage not met by insurance
Challenge: Make the risks realLanguage is critical
Business find it difficult to recognise and interpret climate change stimuli and as such assess their vulnerability to future events.
Business Continuity Planning is weak Don’t see the need for any additional preparation.
Personal attitudes are significant Organisation’s find it difficult to assess the advantages and disadvantages of
alternate adaptation strategies, which invariably have up-front costs associated with them.
How much should you spend (time & money) preparing for an event that hasn’t happened and may might not happen?
Adaptation is business centric not climate centric Need to phrase adaptation in terms of business risk
Risk Assessment FrameworkThe risk assessment framework has been developed through a series of projects with private and public sector organisations to assist businesses assess their vulnerability, resilience and adaptive capacity to climate change.
Then example is drawn from a social housing provider.
Current Conditions
Current Conditions
Examine recent history and identify disruption caused by
extreme weather events
Analyse each event and identify inherent vulnerabilities and
resilience of the system (social, physical, economic, legislative).
Future Scenarios
Future Scenarios
Develop future scenarios, based on climate change predictions, that cover the range of possible
impacts of future events
Assess vulnerability and resilience of existing systems against each
scenario(social, physical, economic and legislative)
Risk Appraisal
Rate each system component according to impact (matrix of
vulnerability against coping capacity
For high impact components identify what can be done to
prevent disruption or improve the recovery process of the system
Cost each measure (£, human resources, skills etc)
Risk Appraisal
Contingency Planning
Contingency Planning
Assess the ability of the system stakeholder to fund/manage the
coping measure (quantify the absorptive/adaptive capacity)
Prioritise coping measures to optimise absorptive capacity
Develop adaptation plans
Integrate into building life cycleClimate Change
CSRLegislation
Time
Val
ue/P
erfo
rma
nce
Inception Handover
Maintenance / Repair
Refurbishment Cycle
Changing Demands
Obsolescence Gap
Refurbishment
Current Performance
Social – Wellbeing (physical, psychological)Environmental – Energy, Water, Pollution; WasteEconomic – Cost in Use, WLC, Productivity, Asset Value
TSB project to integrate the risk framework into an adaptation strategy within the building life cycle.
Thank You - Questions
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