Bridging the knowledge gap to boost SME flood resilience

By increasing our understanding of the impacts of flooding on small and medium-sized enterprises (SMEs), this project helps a range of different actors, including insurers and local authorities, to provide SMEs with better and more tailored support resulting in a more resilient sector.

99% of Yorkshire’s private sector is made up of SMEs. These organisations are often vulnerable to flooding. When they are affected by a flood event, the knock–on effects to the regional economy can be significant and far-reaching. The lack of knowledge about the economic impacts of flooding on SMEs is an important gap that brings significant challenges to SMEs, insurers, lenders, local and regional authorities, and the national government.

This project seeks to fill the knowledge gap about SME flood risk management by working with local authorities and the insurance sector to increase their understanding on the economic costs and resilience efforts undertaken by SMEs. A key part of the project involves developing a robust methodology to assess the direct and indirect costs of flooding. This information enables local authorities to carry out more comprehensive future flood assessments and prepare more robust business plans to lobby for additional funds to be better prepared against future flooding. In addition, the project provides detailed information on the effectiveness of resilience measures and risk reduction activities undertaken by SMEs. This information is useful to insurers, lenders and surveyors, allowing them to improve their confidence that that flood risk is properly priced and managed by SMEs, and thus offer tailored products for small businesses.

Views from the sector

Roger Marsh, Chair of the LEP and NP11 Group of Northern Local Enterprise Partnerships, said: “This project will help improve the economic assessment tools that we currently use to determine the true costs of flooding to SMEs and its wider economic impact on our communities.

“The tool developed by the University of Leeds will also enable us to better articulate the need for future investment in flood risk management infrastructure and our response to future flood events across the City Region.”

Professor Colin Mellors, Chair of the Yorkshire Regional Flood and Coastal Committee said: “Flooding impacts on communities in many ways - businesses and infrastructure, as well people’s homes.

“The YRFCC has been very pleased to encourage and support this important research from the outset. SMEs are a crucial part of our economy and have often been severely affected by flooding, some repeatedly. A unified methodology for understanding that impact more fully and helping show how SMEs can be better supported will greatly assist our broader resilience agenda.

“We very much welcome the findings of the research and hope that they will inform future approaches in respect of those SMEs vulnerable to flooding and coastal risks.”

Cllr Tim Swift, West Yorkshire Combined Authority’s Portfolio holder for Climate and the Environment said: “This study is helping us better understand the needs of SMEs and improve our flood risk management strategy. This collaborative initiative is an important step towards our ambition to make West Yorkshire a place where everyone can enjoy the economic, health and environmental benefits of a net-zero carbon economy by 2038.”

Ian Gibbs, National Technical Manager at Sedgwick said: “SMEs in high flood risk areas face a real challenge getting affordable flood cover. This project is key to helping insurers/brokers and SMEs capture and understand the effectiveness of the flood resilience that has been put in place, so decisions can be made with a detailed understanding of the flood risk.”

Graham Brogden, Managing Director at GJB Consultancy Oxford Ltd said: “Flooding can have a significant impact on SMEs with many of them failing to open following a flood. Resilience plays a crucial part in helping them recover more quickly, potentially saving their business and allowing them to source insurance cover. This study is helping businesses and insurers understand the importance of protecting their property and the effectiveness of those measures.”

Ralph de Mesquita, Senior Technical Risk Engineer at insurer Zurich said: “Understanding the costs associated with flooding will help SME’s justify the time and expense of installing property level flood resilience measures. From our experience, for every £1 invested in flood resilience on average saves £5 in future losses. Preventing, or at least minimising the impact of flood events, will allow businesses to recover quicker.”

Stephen Curry, director, UCVR (Upper Calder Valley Renaissance) said: “Since the 2015 floods in the Calder Valley, UCVR has collaborated with the universities of Leeds and York to co-create a project that puts SMEs in the spotlight when it comes to issues of insurance and of economic recovery. This project does both and we are pleased to have been involved and excited for the businesses about the results and recommendations.”

Project Team: Lead Dr Paola Sakai – University of Leeds; Dr Marco Sakai – University of York; Patrick Bowes, Seamus McDonnell, Justin Wilson – West Yorkshire Combined Authorities; Jon Follows – Environment Agency; Flood Risk Managers of the Leeds City Region; Stephen Curry – Upper Calder Valley Renaissance; Graham Brogden – insurance expert and former head of Defra’s Round Table; Ian Gibbs Sedgwick (and also co-leader of the Defra’s task force Group 2), and iCASP as our main financing partner and UKRI ESRC (ES/S001727/1).