The Damaging Effects Natural Disasters On Australian Businesses
This report was Commissioned to examine the damaging effects natural disasters have on Australian businesses as well as how many businesses manged to successfully adapt to the circumstances and continue operation. The research draws attention to the Fact that the 2009 Victorian Black Saturday bushfires destroyed 1,400 structures, many of those being businesses. With the bushfire royal commission stating that the cost of damages was a total of $4.4 billion, not including agricultural damages. Further investigations reveal that the damage bill for the 68% of Lismore businesses affected was estimated by the NSW government at just under 40 million dollars. The aftermath of the Lismore floods resulted in majority of businesses being forced to shut down, with many uncertain about their future endeavours. It is estimated that only 2 percent of Lismore businesses had invested in flood insurance, proving costly for many. The report evaluates the effects natural disasters pose on businesses and includes an analysis on ways businesses can adapt to the circumstances. It is recommended that affected businesses conduct a business impact statement and reassess the market and companies financial position; conduct an insurance claim; construct an effective new marketing strategy; and follow the multiple other adaptive methods outlined in this report.
Introduction
Natural disasters have always impacted humans, they have influenced, formed and adjusted human behaviour. Shifting the way people live with and respond to the natural world. In Australia alone, billions of dollars have been invested in trying to prevent, prepare for, respond to and recover from natural disasters. Natural disasters have caused infinite intangible losses, instigating grief through the loss of life as well as personal possessions. In business it is common for the unpredicted to become a reality. Over recent years, Australia has been profoundly impacted by a number of various natural disasters including bush fires, floods and cyclones which have not only devastated local communities but local businesses as well. When a disaster situation strikes it can destroy a business.
The impact of Natural Disasters on Businesses
Regardless of the nature of the natural disaster it can have a devastating effect on the livelihood of a business. It can throw a business’s plans and projections into disarray. Supply chains may be impaired, employees might be incapable to get to work, and fundamental facilities or equipment could be damaged. A study by FEMA illustrated an alarming statistic that businesses which endure interruption due to the results of a natural disaster has only a 60% chance of survival.
The most observable effect natural disasters create is the physical damage to the location and infrastructure. Even if the structure is not directly affected region water shortages, electricity outages, or cellular network failures as well as many other factors can alleviate any possibility of continuing operations. If there is a disturbance in transportation, businesses may be unable to send orders or receive essential supplies. Resulting in a business failing to operate in an efficient manner. Both employees and customers may also be unable to safely travel to the businesses location as external factors may restrict access. If a local businesses customer base is positioned in an affected area, consumers may stop purchasing from the businesses for a period of time, damaging the business.
The 2009 Victorian bush fires, commonly referred to as ‘Black Saturday’ had a colossal impact on the Australian economy. Destroying 2,100 homes and over 1,400 structures. The Victorian Department of Primary industries estimated that 11,800 head of livestock, 6,200 hectares of grazing pasture and 3,200 tones of hay and silage were lost due to the bushfires. This had a major impact on businesses that relied on crops and livestock’s. The ‘Insurance council of Australia reported that as of August 2010, $1.2 billion has been made in insurance claims, 84% for property and 16% for vehicles’. The bushfire royal commission stated that the cost of the damage caused by Black Saturday was a total of $4.4 billion, which does not involve agricultural damages. When a natural disaster occurs everything that runs a business is interrupted as well as everything that is needed to continue trading such as couriers not operating, electricity or water shortages, and lack of employees. Christine Adams the owner of the Marysville caravan and holiday park was renowned for her personal touch and hospitality at the much loved Scenic Hotel. Both the scenic hotel and Christine’s home were tragically lost in the Black Saturday bush fires. “You lose your whole self-worth, your identity, you don’t know which way to turn anymore, you have the inability to make decisions. Saying to me what do you need was just a question I didn’t know how to answer” (Adams, C, 2013)
In 2017, the aftermath of cyclone Debbie devastated Lismore and surrounding regions being categorised as the worst flood in 47 years. Businesses located in Lismore’s CBD were submerged by up to 3.5meters of water, after the Wilsons river broke its levee. ‘The Lismore floods peaked at 11.59 meters, with the damage bill for the 68% of Lismore businesses affected was estimated by the NSW government at just under 40 million dollars.’ (ABC News, 2019). John Rees and wife Dianne, have owned the Bluey’s café for over 30 years and inhabited the cafes upstairs storage room in order to be on the premises for the unavoidable clean up. “About a metre of water came into the shop and I reckon its $30,000 to $50,000 worth of damage” (Rees, J, 2017). Similarly for numerous businesses in the affected region The Bluey’s café was uninsured due to the high costs. “You can’t get insurance, Its price is prohibitive so we’ll just have to wear it”(Rees, J, 2017).
How Businesses successfully adapted following a Natural Disaster
After a natural disaster it is common for businesses to be unable to survive both the physical and financial loss, for those that do, the road to recovery can take months, occasionally years. It is unpredictable, draining and entails an enormous level of commitment and perseverance from an owner or management team. In the case of any natural disaster businesses may find themselves needing to react to the reality of the situation and find a way around it. The most effective way for any business to cope with a natural disaster is to have a plan enforced to help prepare for the emergency. The 2009 bushfires that affected Marysville, Victoria proved that as businesses were recovering, challenging decisions became a reality. Yet, despite all the tests Christine and her husband Ken faced they were determined to help re-establish the town and bring back tourists so their business could thrive once again. Throughout the recovery phase, a business must conduct a business impact statement and reassess the market and the companies financial situation.
In order for a business to return to ‘normal’ there are countless aspects that must be taken into consideration. Such as what the overall damage assessment is, if trading can still occur, what stock, supplies, equipment or other assets have been lost, what is recoverable, what does insurance cover, the time in which claims can be processed, what methods of communication are available and whether there is a disaster plan. In the early stages businesses are provided with assistance from local organisations and the government such as much needed resources, materials and funds. Soon after the 2009 Black Saturday bushfires Christine and Ken invested everything they had left into rebuilding the Holiday Park once they received their insurance claims, so they could accommodate visitors as Marysville was re-established. After a natural disaster it is common for tourists to drop in number, especially somewhere rural like Marysville. In order for a business to successfully run after a natural disaster marketing is key. “You would have some visitors that would come up for a day and then go home, they wouldn’t stay in the region, people felt at that point especially in the first 12 months that they were being intrusive so very few asked to stay.” (Kennedy, D, 2013).
It is fundamental for a business to construct an efficient new marketing plan after a natural disaster. Christine and Ken begun creating their new marketing strategies, to ensure customers knew that it was okay to be there, and that the holiday park existed as many people assumed there was no accommodation and 12 months later making the same assumption. “I’m a big believer in marketing, marketing is not the first budget that you drop when you’re running low on finances, that’s the thing you’re going to double, If you’re serious about the business your marketing needs to be at the top and that’s what we did” (Adams, C, 2013). The Holiday park has now helped put the region back on the map as a desirable tourist destination. Christine and Ken continue to support and promote Marysville and provide accommodation that is so memorable and personal that tourists have now returned.
The Lismore floods caused majority of businesses to shut down, with many uncertain about whether they will ever reopen. It is estimated that only 2 percent of Lismore businesses had invested in flood insurance, Mark Evan’s affordable Wholefoods being one of them. “But it’s not cheap, Thirty thousand a years a lot of money, but this time it was worth it, we lost about $350,000 in stock and equipment last march. We reopened for businesses on May 22nd” (Evans, M, 2017). In order for Evans to restore his business, his insurance company was key, providing support and funds to restore his store. After a natural disaster if a business is insured the first thing that must be done is getting in contact with the insurance company and make an insurance claim. This must be done before cleaning up and removing goods. It is common to be asked to document the damage to the premises, fixtures, stock, customer records, vehicles and equipment. Or an insurance assessor may be needed to inspect the property before any cleaning can occur. It is crucial for businesses to follow the advice provided by the insurer as it is common for unauthorised repairs to not be covered. Despite the tragedy and loss Mark Evans endured, by following the information provided above, it enabled his business to survive and continue operating.
The NSW Lismore floods caused devastating effects however, It can also unite a regional community by sharing a common goal. The city of Lismore united to assist local businesses in reopening and rebuilding the Lismore economy. Many local and national organisations assisted Lismore businesses with donations such as Colourworks Australia Ltd with a donation of $50,000 worth of office equipment for any business that required new printers and photocopiers. Southern Cross University opened its doors, offering free working space and internet connections for businesses, allowing many to continue operations. “Someone can register, arrive with their laptop, hook it up and use the Universities wireless systems and internet connectivity. That way their business can continue and they can get back on their feet more quickly” (Morris, A, 2017). The Chamber of Commerce and industry also implemented Category C Disaster Relief Funding, in under two weeks post flood. Providing extra financial help with grants of up to $15,000 to help local businesses and the community get back on their feet.
Conclusion
In summary the effects natural disasters pose on businesses are extensive and can easily effect the livelihood of not only the business but also the owners, employees and community as a whole. Natural disasters have the power to destroy a business, therefore outlining the importance of a proactive plan enforced to assist in case of emergency. Despite the challenges businesses face that are caused by a natural disaster, business owners such as Christine and Ken, Marysville, and Mark Evans, Lismore, successfully adapted to the challenges they faced and managed to reopen their businesses and operate as normal. Despite the devasting outcomes natural disasters cause on a community, communities unite together to re-build their community and local businesses.
