One in three business properties at risk from flooding, yet many unprotected from climate risks

British businesses are being put at risk from extreme weather due to a lack of awareness and support, according to research commissioned by Aviva.

A survey conducted by YouGov for Aviva3 for its ‘Building Future Communities’ report found that 57% of SMEs believe climate change will have an impact on their business in the next ten years, and a quarter (25%) believe it will affect their livelihood within the next year. However, a sizeable minority, (17%) aren’t concerned at all, believing it will have no impact at all in a decade.

Despite their worries, business owners seem unprepared or unaware of the risks their premises may face. Three quarters (75%) of SMEs don’t have a business continuity plan that considers climate change risks, and just 38% have flood insurance in place. And less than a fifth (18%) of all businesses have implemented any flood resilience measures to protect their premises.

Yet according to Aviva’s flood map data, almost one in three (30%) commercial properties1 are at risk from some type of flooding. Analysis of Aviva’s claims data reveals an even more worrying picture. In July 2021, the insurer recorded its highest number of commercial flood claims2, more than double the previous high in January 2016. And recent weather patterns suggest that flooding is no longer confined to the colder months. According to Aviva data, on average, July and August are the most prevalent months for commercial flood claims, suggesting that heavy summer downpours are putting businesses at risk from flash floods, which are harder to predict or prevent.

Lack of information and incentives are barriers to taking action
The research survey3 conducted for Aviva showed that a lack of information and financial incentives are acting as a barrier to business owners taking preventative action. Of those without flood mitigation measures, over a quarter (27%) said they needed greater understanding of the risk their property faces, while almost a fifth (18%) said they would like incentives to help install measures before an event happens.

Aviva’s ‘Building Future Communities’4 report highlights the challenges being faced by communities from extreme weather. The report outlines seven key steps for change; actions which the insurer believes need to be taken urgently to tackle the climate crisis.

To help small businesses, Aviva is partnering with Enterprise Nation, a UK-wide small business support network with a focus on smaller SMEs, which make up the majority of businesses. As part of the partnership, Enterprise Nation and Aviva will launch a ‘Plan it with Purpose’ free educational hub, which provides free online events, advice and educational resources to SMEs on a range of sustainability issues, including an educational series on climate resilience.

Nick Major, MD, commercial lines, General Insurance at Aviva, said; “Unsurprisingly, over the past year businesses have been focused on dealing with the impacts of Covid and Brexit. However, as our data shows, climate change is already having devastating impacts here in the UK, and extreme weather is set to become more commonplace in future. Businesses frequently bear the brunt of this damage, but are often overlooked when it comes to prevention and protection. Planning regulations often prioritise homes over businesses, which leaves many SMEs exposed to flooding and other climate risks.

“SMEs account for over 99% of UK enterprises5, and they are vital to the wellbeing and recovery of local communities – particularly after extreme weather – offering support, jobs and stability. It’s crucial, therefore, that businesses receive more support with better insight into the risks they face to help them safeguard their livelihoods from climate change.

“In our ‘Building Future Communities’ report, we call for actions to be taken to ensure that SMEs are sufficiently protected from the impacts of extreme weather. By partnering with Enterprise Nation, we can help provide advice and support to SMEs, enabling them to become more climate-resilient.

“But we’re also calling for action to be taken across industries and Government, to ensure that businesses, from design to construction, are both sustainable and resilient to the changes that climate change will bring, and that they are built to the right standards, in the right places.”

Excess heat also a concern
Of those that believe climate change will have an impact in the next 10 years, 42% were worried about excess heat, 37% were concerned about flooding and 35% believed storms will affect their business.

But despite these concerns, just 17% of business owners said they would consider problems from heat when choosing new business premises, and only 38% considered energy efficiency when they selected their last business property. However, large glass frontages or south-facing offices or buildings could lead to uncomfortably hot temperatures inside for workers. Some features of businesses may also pose other climate threats. For example, warehouses can often be situated next to rivers and others have basements which house stock or IT equipment. Overall, enterprises were most likely to factor in flooding (58%)when selecting a new property for their business.