How to protect yourself from B.A style incidents
No doubt all businesses have noted the recent British Airways incident where an apparent power surge caused significant damage and brought the airline and its passengers to their knees. What you may not have considered, however, are the ramifications a similar incident might have on your business. We’ve put some thoughts together to help you ensure you’re adequately covered.
British Airways passengers hoping to escape the country last weekend for some summer sun were left stranded by an IT meltdown that grounded more than 1,000 flights from Heathrow and Gatwick. Though initial fears were that the company had experienced a cyber attack, current evidence points to a power supply issue.
As a result, British Airways could face a bill of at least £100m in compensation, additional customer care and lost business. This has further been exacerbated by the trade union GMB’s claim that IT outsourcing made by B.A. in 2016 is at the root of the issue.
It could happen to SMBs
It’s clear that this type of incident can happen to any business. Indeed, dealing with the financial loss can have a more onerous impact on SMBs as they won’t have the strength of balance sheet and cash-flow or cash reserves that BA has.
Companies like British Airways almost always have a team of crisis management experts to deal with the P.R. fallout and mitigate damage to the brand and reputation of the company. Thanks to this and B.A’s dominance in its market it will survive this incident. SMB’s are unlikely to have the luxury of such dominance and so damage to the brand can result in a serious loss of clients to competitors.
The costs of dealing with this type of issue are enormous and not all insurance policies would cover it. The devil is definitely in the detail. The structure of insurance programmes for SMBs absolutely must fully identify and cover exposures of this nature as the failure of the policy to respond when a claim is made could be financially catastrophic.
Some insurers provide specialist cover for failure of equipment as a result of breakdown and power surge either through specialist policies or through comprehensive cover for certain industries. This cover can include:
- Replacement of computer equipment and reconstitution of electronic data lost as a result of the equipment failure.
- Resultant effects on revenue and profits
- Expediting expenses and additional increased costs to get back to usual business quickly
- Crisis containment & brand protection – an unknown factor and critical to the future of any business, some insurers offer access to marketing specialists to support you.
To ensure a watertight approach in the event of an incident (no matter how small) it’s essential that all businesses have a business continuity plan in place to back up their insurance programme. They should consider contingencies such as alternative power arrangements; power surge protection; use of other group sites and backup facilities; the effect on the business and staff; how to deal with suppliers and customers; who speaks to the press and what will they say.
Had the cause of the issue been a cyber attack as originally assumed, specialist cyber cover would also be required.