London, UK – Fire risks continue to pose a significant threat to businesses, often leading to interruptions in operations and disruptions in the supply chain. Despite efforts to manage these risks, fire remains a top concern for business owners, ranking third after cyber incidents and natural disasters, according to a recent survey by the Allianz Risk Barometer.
Analysis of over 1,000 business interruption insurance claims in the past five years, totaling over US$1.3 billion, reveals that fire is the most frequent cause of these claims, accounting for 36% of the total value. This underscores the widespread impact of fire-related incidents on businesses and the economy.
Alberto Barani, a Business Interruption Group Leader at Allianz Commercial, highlights the lasting effects of fire and explosion incidents, particularly in industries dealing with flammable and explosive materials such as pharmaceuticals and chemicals. The recovery process for damaged plants in these sectors can often take years, posing significant challenges to resuming full production capacity.
Moreover, with the increasing use of lithium-ion batteries and electrification, the risk of fire has escalated. Several large fire incidents, both at sea and on land, have been linked to inadequate handling and transportation of these batteries in recent years, signaling the need for heightened precautionary measures.
To mitigate the risk of loss from fire incidents, businesses are advised to regularly assess and update their fire mitigation practices, including preventative measures, fire extinguishing methods, and contingency planning. These proactive steps are essential for businesses to minimize the potential impact of fire-related incidents on their operations and the wider supply chain.