The Impact of Flooding

by Business Case Studies on Tuesday 31st July, 2007

The Impact of Flooding

When will the summer arrive?  July has seen unusually high levels of rainfall and widespread flooding across the UK. This has led to loss of power and water supplies and extensive damage to buildings and possessions. By Monday 23rd July, the BBC was reporting that '43,000 homes in Gloucestershire have no power, with power cuts also taking one of the county's main sewage treatment centres off-line' (BBC, 23rd July 2007a). Problems with power supplies have been caused as flooding occurs in key electricity sub-stations. Maintaining or restoring electricity supplies will rely on effective teamwork skills by the electricity suppliers. This is made much easier by prior contingency planning by the organisation.

The Times 100 case study looking at energy supplier Npower describes how a team-based approach to general planning helps minimise risk and could be used to respond to problems.

Whilst utility providers will see increased costs as the respond to the problems of flooding, other business areas are also seriously affected. Whilst the south east of the UK has managed to avoid any serious flooding, there are serious financial implications for the insurance companies that are concentrated within the area. Flooding occurring in June and July is expected to cost the insurance industry at least £2bn according to the British Association of Insurers (BBC, 23rd July 2007b). In addition to the enormous cost of paying out claims, the insurance companies face huge problems trying to administer the huge surge of enquiries. Despite the problems, rapid progress is being made in paying out claims for flood damage across the UK, with most claimants from earlier in the month having been processed (BBC, 17th July 2007).

Under a current agreement between the insurance industry and the Government, homes hit by flooding will still be offered insurance in the future by the same provider (BBC, 26th June 2007). However, there are growing calls for developers to provide flood insurance for the first 20 years after a house is built. This is a proposal reported to be under consideration by Gordon Brown (BBC, 14th July 2007). This might be a serious issue given the government has not ruled out building further homes on flood plains (BBC, 23rd July 2007c).

Sources:

Floods bring chaos across county – BBC News, 23 July 2007

The Times 100 Edition 12 Case Study  – NPower

Claims over floods to 'top £2bn' – BBC News, 23 July 2007

'Rapid' progress on flood payouts – BBC News, 17 July 2007

Flood plain homes 'not ruled out' – BBC News, 23 July 2007

Q&A: Flooding and insurance – BBC News, 26 June 2007

Call for flood insurance change – BBC News, 14 July 2007

Suggested Study Questions:

What is meant by contingency planning?

Other than protection against flooding, what types of insurance are offered by insurance providers?

Given the problems associated with flooding, why do you think the government is still considering further building on flood plains?

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