Olympics Countdown: Capital preparations

This summer will see a huge flood of people into the UK - an estimated nine million spectators, 300 000 athletes, 70 000 volunteers, trainers and dignitaries - presenting a significant opportunity from the massive increase in footfall and revenue.

However, there is also the potential for significant business interruption. A potential disruption that was recently characterised as "inevitable" by Network Rail's CEO Sir David Higgins, and he is not alone.

Transport services and utilities will all be under added pressure to deal with the complex logistics of a major global event. Companies will be vulnerable to a wide range of exposures and must plan and implement proper risk management procedures in order to be prepared.

Recent announcements indicate the scale of the potential disruption. Transport for London predicts significant delays in travel black spots, while the Licensed Taxi Drivers' Association union says up to 50% of its members do not intend to work during this period.

The Olympic organising committee has even warned businesses that internet services may be disrupted, and recommends that companies put contingency plans in place.

The range of risks companies will face this summer are far-reaching, and will affect a wide range of operations, from supply chain and cash handling to environmental liability.

Supply chain risk

From July to September it won't be business as usual for deliveries and freight movement. With an estimated 7.9 million spectators arriving in London and transport links congested, routes may be blocked, delays are virtually inevitable and overnight deliveries may become mandated in certain areas.

Heavy congestion is also expected at ports with more traffic - freight and private vehicles - passing through. Products required on a ‘just in time‘ basis and temperature-sensitive cargo could suffer from delays and, therefore, deterioration.

Transport companies will look to subcontractors to ease the burden, but the more links in the logistics chain, the weaker it becomes. Companies will need to ensure that work is not contracted to sub-standard suppliers and get written instructions to ensure subcontracts are only given to legitimate, fully-insured suppliers.

Another area of focus is the increased threat of theft and there are likely to be opportunities for the unscrupulous to take advantage of stretched business. Likely scenarios include drivers being approached by individuals purporting to be staff at the intended delivery address and instructing drivers to deliver to another location.

Companies should also focus on the safety of their motor fleets. If company drivers need to take a break during hours of darkness, it should be in a well lit area preferably covered by CCTV. Vehicles should not be laid up at the perimeter, or against fences or trees. Re-fuelling of vehicles should also only occur on well lit forecourts with CCTV coverage.

Cash handling

Cash is a primary target for criminals, and thieves could make determined efforts to steal it by forced entry or by threatening force. In anticipation of increased sales generated by the high number of visitors, any organisation that handles cash will need to ensure that appropriate security measures to protect against theft, be it opportunistic or planned, are in place.

Companies need to review the adequacy of their existing security measures, including the general physical security of the site and buildings, as well as electronic security in the form of intruder alarms and CCTV protection.

Ways of reducing the amount of cash on the premises by the use of electronic transfer should be considered, as should more frequent banking, the use of secure internal cash movements or the use of a cash and valuables-in-transit company.

Environmental liability

With some companies stockpiling bulk fluids such as fuels, chemicals and liquids for production due to supply concerns, there is an increased chance of spills and seepages from bulk or through pressure on pipes and tanks.

Increased waste or waste products, or a build up of waste through the inability of carriers to keep up with disposals, can lead to on-site management issues and a greater risk from seepages and spills.

Therefore, companies should check that their current insurance covers them in the event of an environmental incident - both for a sudden event or a gradual pollution event.

Underinsurance

Underinsurance could be a major risk as businesses look to hold more stock and may forget to inform their insurer, resulting in inadequate cover. The best approach when it comes to insurance cover is to be over-cautious.

Companies must ensure their public liability cover is adequate as more people than normal will be gathering or working in public areas and buildings such as pubs, clubs and hotels, which can affect accumulation exposures.

In response to this range of increased risks, companies must ensure they have thought through all the potential risks they are exposed to and are adequately prepared.

This will include reviewing insurance cover; some insurers will be providing additional cover and wider limits for commercial combined policies over the Olympic period.

Business continuity plans should also be tested and updated on a regular basis to ensure their effectiveness in the event of disruption, so that businesses have peace of mind that they can enjoy the fun and games this summer.

Ian France, regional manager, commercial property UK division, Chartis.