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How disasters and emergencies affect businesses

  • What are disasters and emergencies and why do they occur?
  • What businesses can do?

What Are disasters and Emergencies and Why Do They Occur?

Disasters and emergencies are caused by hazards.  A hazard is a potential threat that can cause human, property and environmental losses.  There are many sources for hazards that can be classified into natural, technological, and human sources.

Natural hazards are often classified into:

  • Tectonic hazards such as earthquakes, landslides, rock-slides, avalanches, tsunamis, and volcanoes;
  • Mass movement hazards such as debris movement, land subsidence, and expansive soils;
  • Hydrological Hazards such as floods, drought, and desertification;
  • Meteorological Hazards such as tropical cyclones/Hurricanes, tornadoes, firestorms, sever winter storms, hail storms, frost, extreme cold, extreme heat, windstorm, sandstorm,s, wildfire, thunderstorms, and climate change;
  • Biological/health hazards such as human epidemics, livestock or animal epidemics, plant and agricultural epidemics

Technological hazards are usually classified into:

  • Transportation hazards such as transportation infrastructure disasters, airline accidents, rail accidents, maritime accidents, and roadway accidents;
  • Infrastructure hazards such as power failures, telecommunication failures, computer network failures, water and sewer failures, gas distribution line failures, dam failure, food shortages, and economic failures.
  • Industrial hazards such as hazardous materials processing and storage accidents, and mining accidents
  • Structural fires and failures

Human made hazards are classified into intentional, civil, and political hazards such as terrorism, civil unrest (protests, strikes, rioting), stampedes, crime, and war.

How do disasters and emergencies affect businesses?

Did You Know?

According to Industry Canada there are just over one million small businesses in Canada that have employees (excludes self-employed entrepreneurs). Ninety-eight percent of businesses in Canada have fewer than 100 employees.
Small businesses contribute slightly more than 30 percent to Canada’s GDP and about 48 percent of the total labour force in the private sector.

Small businesses account for over two thirds of employment in five Canadian industry
categories: non-institutional health care, forestry, other services, construction, and
accommodation and food. Roughly 21 percent of small businesses operate in Canadian goods-producing industries; the remaining 79 percent operate in service industries.

Small businesses are active in international trade. In 2009, about 86 percent of Canadian exporters were small businesses.

Many institutions define small businesses according to their own needs — the Canadian
Bankers Association classifies a company as “small” if it qualifies for a loan authorization of less than $250 000, whereas the Export Development Corporation defines small or “emerging” exporters as firms with export sales under $1 million. In some instances, Industry Canada has used a definition based on the number of employees, which varies according to the sector —goods-producing firms are considered “small” if they have fewer than 100 employees, whereas for service-producing firms the cut-off point is 50 employees. Above that size, and up to 499 employees, a firm is considered medium-sized. The smallest of small businesses are called micro-enterprises, most often defined as having fewer than five employees. The term “SME” (for small and medium-sized enterprise) refers to all businesses with fewer than 500 employees, whereas firms with 500 or more employees are classified as “large” businesses.

Did You Know?

Most small businesses have not prepared business continuity plans to protect their assets, staff and business operations.

Many natural, technological and human made hazardous events occur in Canada and other parts of the world each year; majority of them are very small and do not affect businesses and communities significantly. However, large and very damaging hazardous events have occurred in the past and could happen again at anytime. Some hazards are predictable such as hurricane and flooding, but some cannot be predicted such as earthquakes or industrial accidents. Therefore, it is more important for businesses in the private sector and the communities to understand their risks, make business continuity plan, and take risk reduction actions and preparedness measures to ensure safety and stay in business.

Generally, most large and medium size businesses have invested in business continuity planning. However, many small businesses have not developed proper and standard business continuity plans to protect their assets, staff and business operations in case of  large internal or external emergencies. During disasters, business facilities and buildings—or their components or contents— can be damaged, and become inoperable or unusable. The same can happen to lifeline infrastructure systems and their components, including those related to transportation, such as roads, bridges, railways, ports, and airports, and those related to utilities, such as distribution lines for water, waste water, electric power, telecommunications, natural gas, and liquid fuels. Damage incurred from these hazards, such as broken gas or water pipes, can itself be hazardous, generating further damage by igniting fires or flooding buildings.

Hazards such as structure failure, falling, collapsing or airborne objects, fires or flooding, and others can also cause serious casualties. In addition to human losses and injuries, businesses can incur direct economic losses resulting from damage to existing property. This causes businesses not to be able to continue their operations and generate revenue, due to other business and employment interruptions or terminations brought about by damage to private property or public infrastructure.

Even when a business is not directly affected by a disaster, it might be affected by distance disasters through supply chain and impacts that such disasters might have on suppliers or customers.  A large earthquake in Japan could disrupt businesses in Canada through supply chain connections. A hurricane in the USA might impact businesses in Canada through the impacts that it might have on its prim customers.

What Businesses Can Do?

Many businesses understand the concept of business continuity planning. But these could be complex issues depending on their particular industry, size and scope as well as their level of risks from natural, technological and human made hazards. All businesses must account for all of their exposed, relevant hazards in order to reasonably stay in business.

As part of business continuity planning, it is critical for businesses to also incorporate risk mitigation and reduction solutions into their business continuity planning. By doing so, businesses protect the organization’s assets (people, property, operations); sustain the capability to provide goods and/or services to customers and/or its supply chain; maintain cash flow; preserve competitive advantage and reputation; and provide the ability to meet legal, regulatory, financial and contractual obligations.