- Earthquakes cost the US $6 billion p.a., including lost profits and repairs.
- Loss of income, damaged equipment, and inventory loss significantly affect earthquakes.
- Workplace injuries resulting in worker’s compensation claims may occur.
- Footings, a continuity plan, reviewing policies, investing in equipment, and educating employees can help protect businesses.
- Comprehensive preparation is key to protecting businesses in earthquake-prone areas.
As a business owner or entrepreneur, you work hard to ensure your business operates smoothly. However, there is one disaster that could adversely affect your business, and that is an earthquake. Earthquakes are natural disasters that strike without warning and can potentially cause significant damage to your business premises, equipment, and inventory.
The Cost of Earthquakes in the U.S.
It’s estimated that earthquakes cost the U.S. $6 billion annually. This cost can include repairs, replacements, and lost profits due to business interruption. In an earthquake, your business will be subject to various losses, such as damaged equipment, destroyed inventory, and even loss of life. Here are some individual ways an earthquake can affect your business.
Loss of Business Income
One of the direct effects of an earthquake on a business is the loss of income. If your business premises are affected, you may not be able to operate for some time, resulting in a significant loss of income. Additionally, if your customers’ businesses are also affected, they may not be able to utilize your goods or services, causing a further loss of income. In some cases, the impact of an earthquake on a business is so severe that the business is forced to shut down permanently.
Damage to Equipment
An earthquake can cause significant damage to your business equipment, including computers, machinery, and vehicles. If your business relies heavily on machinery or technology, even a minor earthquake can significantly disrupt your operations. Beyond that, the cost of repairing or replacing the damaged equipment can set your business back significantly.
An earthquake can damage or destroy your inventory, making it challenging to meet the demands of your customers. This can have a significant impact on your business, mainly if you are unable to restock quickly. An earthquake can be especially devastating if you operate a business that relies on perishable goods, such as food or pharmaceuticals.
An earthquake can lead to injuries among your employees, which could result in worker’s compensation claims and medical expenses. As a business owner, you have a responsibility to ensure that your employees work in a safe environment, which includes safeguarding them against natural disasters like earthquakes.
In general, business interruptions can cost the economy $588 billion annually. When added to other earthquake-related losses, it can be devastating for any business. As such, a comprehensive business interruption plan is essential for protecting your business against the effects of an earthquake.
How to Keep Your Business Protected From Earthquakes
Earthquakes might not happen as often as other natural disasters, but it is essential to have a plan in place to protect your business. Here are some measures you can take:
The structural integrity of your office can determine the damages an earthquake can cost. Installing robust concrete footings can help ensure that your office building remains standing even in an earthquake. These footings absorb the tremor, minimizing damage to the building.
Create a Business Continuity Plan
Creating a business continuity plan is essential for any business, but it becomes all the more important if you operate in an area prone to earthquakes. A comprehensive plan should cover all aspects of your operations, such as backups and redundancies.
Review Your Insurance Policies
Reviewing your business insurance policies in the event of an earthquake is essential, as they may not cover property damage and other losses caused by natural disasters. Ensure you understand what type of coverage your insurance provides and if any gaps need to be filled.
Invest in Earthquake-Proof Equipment
Investing in earthquake-proof equipment can help protect your business from losses if you are operating in an area prone to earthquakes. Look for durable materials and reliable suppliers that will stand the test of time.
Educate Your Employees
Your employees should know what to do in the event of an earthquake. Provide them with training on responding and conducting themselves during an earthquake to reduce the risk of injury or damage.
Earthquakes can be incredibly disruptive to any business, but with the proper preparation, you can minimize losses and ensure your business is well-protected. From reviewing insurance policies to investing in earthquake-proof equipment, there are various steps you can take to prepare for an earthquake and protect your business.