Even if you’ve had the foresight to create a business continuity plan, you may not have considered how you and your employees would respond if the power went out today and didn’t return for several days.
Electrical outages have become an increasingly timely concern as the U.S. electrical grid experiences growing pressure from rising electricity demand, aging infrastructure, and severe weather events. Though blackouts can be unpredictable, you can proactively minimize their impact by identifying your vulnerabilities before an emergency puts them to the test.
Identify Your Most Critical Electrical Needs
Start by listing which aspects of your business would immediately stop working without electricity. Depending on your industry, these might include:
- Computers, servers, and internet connections
- Point-of-sale systems and payment processing
- Refrigeration and temperature-controlled storage
- Manufacturing equipment and machinery
- HVAC
- Security systems and electronic access controls
- Lighting and communication systems
Prepare for Equipment Damage and Inventory Loss
An extended power outage can cause financial losses beyond missed sales. For example, restaurants, grocery stores, pharmacies, and other businesses that rely on refrigeration may lose valuable inventory when temperatures rise. Manufacturers may experience production interruptions, while businesses that depend on specialized equipment could incur additional expenses if electrical fluctuations damage sensitive machinery. Consider whether a backup generator, uninterruptible power supply, surge protection, or other safeguards would be a worthwhile investment.
Consider How You’ll Communicate
Since communications channels like the internet and VoIP phone service may also go offline during a power outage, your business continuity plan should establish alternative ways to reach your employees, customers, vendors, and other essential partners if your primary methods become unavailable. Keep contact information accessible in an offline location and designate someone to coordinate updates.
Protect Your Business Data
Unexpected shutdowns can interrupt transactions and cause people to lose unsaved work. Cloud storage and automatic backups reduce the risk of permanent data loss, but they’re only part of the solution. You should also account for how employees will access their critical records if local networks, internet connections, or authentication systems become unavailable.
Periodically test your backup and recovery procedures – it’s one thing to know where you’ve saved valuable information, and another to be confident that you can retrieve it in a crisis.
Plan for Employee and Customer Safety
A sustained blackout can create uncomfortable or unsafe working conditions, particularly during extreme heat or cold. Without electricity, your building may lose climate control, lighting, ventilation, and access to safety systems. Electronic doors and elevators may also become unusable.
Establish simple, logical guidelines for when employees should evacuate the premises, whether your team can work remotely, and who has the authority to suspend operations. Remember, employee safety should always be a higher priority than maintaining your usual business hours.
Calculate the Financial Impact of Downtime
How much financial flexibility will your business need during an extended shutdown? Even when your building and equipment remain intact, several days without electricity can be expensive.
Lost revenue is only one consideration. You may also experience:
- Ongoing payroll and lease obligations
- Spoiled inventory or damaged materials
- Emergency equipment rentals
- Temporary relocation expenses
- Delayed orders and missed deadlines
- Lost customers or canceled contracts
- Additional costs associated with restarting operations
Understand How Your Insurance Responds
Commercial property and business interruption insurance can provide valuable financial protection, but it’s important to understand how your policies address utility failures. For example, standard business interruption coverage generally requires a covered cause of physical damage.
Rather than assuming your policy will cover every blackout-related expense, review these possibilities with your insurance professional before you experience an outage. Depending on your business and the terms of your policy, you may wish to consider additional coverage for losses involving off-premises utility failures, equipment breakdown, or spoiled inventory.
Build Resilience Into Your Business
The Ingram Agency encourages business owners to look beyond immediate property risks and consider how unexpected disruptions might affect their operations and financial stability. Our team works closely with clients to evaluate their exposures and recommend customized insurance solutions from top-tier carriers.
A prolonged blackout can reveal vulnerabilities that aren’t immediately obvious during your everyday operations. Identifying those weaknesses now gives you an opportunity to strengthen your contingency plans and modify your insurance coverage if it no longer provides the protection your business needs.
Contact us to discuss your commercial insurance coverage and proactively shield your business from unexpected interruptions.