Many small business owners are unaware of the numerous risks within their business and the effect these could have on their ability to continue trading. The real cost of a major loss incident is not only the direct loss or damage, but also the time spent dealing with the aftermath – including disruption to work and production schedules. Customer loyalty and business reputation can also be adversely impacted.
As a small business owner some of your most important risk areas may include fire safety, security, telecommunications, IT systems, environmental hazardous substances, electrical safety and for those in the hospitality sector, deep fryer cooking.
Looking to eliminate or minimise these risks is good business practice and having adequate insurance cover is critical to your business surviving a significant loss. If you don’t understand your Business Insurance policy, limits and endorsements contact your broker to discuss these.
The following section includes information as a brief overview on some of the most common areas of fire risk for a small business.
Keeping premises tidy is vital to reducing risk. The placement of rubbish skips and bins is something that is often given little thought. Every year the NZ Fire Service attend hundreds of fires that have spread from rubbish skips and bins. These are almost always deliberately lit and can result in significant costs if the fire spreads to a nearby building. The NZ Fire Service has provided a nine-point checklist to help reduce the risk of rubbish fires damaging your business:
1. Locate bins well away from building.
2. Store combustible waste in metal rubbish containers with self-closing lids.
3. Products and materials that need to be stored outside must be in limited pile sizes and well away from buildings, inside and outside the boundary fences.
4. Arrange to have waste collected weekly to minimise rubbish on site at weekends.
5. Ensure public access is limited to your building and yards.
6. Define safe designated smoking areas for staff.
7. Lock bin lids when not in use.
8. Install and maintain adequate perimeter fencing and secure the property at night.
9. Provide security lighting and surveillance equipment.
Source: Preventing rubbish fires.| Fire safety for businesses. NZ Fire Service FS1522
Storage of wooden pallets is also extremely important. It is crucial that these are not stored against a building and should be at least 10m away. Wooden pallets have air gaps which allows a fire to escalate rapidly. If the 10m rule cannot be physically met you should store pallets as far as practical away from the building.
Electrical & Power surge safety
Electrical fires represent another high percentage of fire insurance losses and often these losses are large scale fire incidents. Fires are commonly caused by loose electrical connections, weakening of insulation and poor maintenance of electrical equipment. Legislation requires specific preventative action – disconnecting, isolating and making safe any defect which constitutes an electrical hazard to any persons, livestock or property. To minimise the potential for such losses, it is necessary to complete regular ongoing inspection and maintenance which is to be completed by a qualified electrician.
In terms of power surges or spikes your computers and IT systems could also be at risk. As an absolute minimum, all IT devices should have a good quality surge protector unit between the AC mains and the device to eliminate spikes.
Deep fryer cooking
Deep fryer appliances are typically found in restaurants, fast food outlets, staff canteens and other commercial cooking facilities. When used incorrectly or poorly maintained they pose a substantial fire risk. The fitting of automatic cut-out mechanisms are essential to prevent the unit overheating and to be effective, it needs to disconnect the energy supply. All fryers need to be maintained in safe working condition and checked at least annually by an authorised service technician.
The best practice for business premises is the installation of hand-operated fire extinguishers and/or hose reels. Accidental fires are more likely to occur during working hours due to the greater use of electrical equipment, heating and normal processes. Fire extinguishers should be installed by approved contractors, mounted on brackets with clear signage indicating their positions so that they can be easily located in an emergency. They require annual servicing by approved contractors and should also be checked regularly by staff on site.
These guidelines are of a general nature only. They are not intended to be a comprehensive list of all the risk management steps you should consider taking to reduce the risk of damage and financial loss, nor is it intended to be legal advice.