The insurance bill collectively covering Oxfordshire for the recent floods is likely to be £34m, it has been estimated. But it is not just the physical losses associated with property that can affect businesses. If a building and its facilities are paralysed, that can mean the company is too, ultimately leading to the loss of invaluable custom.

As a result, for some it could be many months if not years before the full effects of the devastation have worn off.

The impact on a business and the local economy can be long term. Some businesses not directly affected by the flood have suffered indirectly as their suppliers were hit.

The danger is that many firms which have escaped now may continue trading without considering that next time it may be them.

Now, more than ever, businesses should reflect on what happened, and be proactive to ensure they have taken every precaution available, so if something did interrupt their business, they could survive.

The event does not have to be a flood - it could be the loss of a broadband connection for a day, power failure, product recall notice or a postal strike. All these would to some degree have an impact.

You may already have a computer back-up system but what happens if you cannot get to your offices for a day, or even a week?

How long will it take to reconfigure a new computer system so the information can be used? Who is going to build the system and what are the specifications?

How and where are you going to operate from? Have you got the telephone numbers of staff, suppliers, customers?

We take it for granted that we have electricity and broadband to our offices and homes. But what happens if they fail?

Imagine you cannot use your computer as the electricity supply has failed. Although e-mails and orders have been sent to you, you cannot read them.

Some may be time critical and require an immediate response. But if you do not respond, the client finds another supplier.

Business continuity management is part of the solution, combined with effective insurance cover. This will allow a crisis situation to be managed and increases the chance of recovery.

In simple terms, business continuity management is a pro-active approach to survival, where potential threats to a firm are identified in advance and a plan of action is devised to keep the business going with the minimum of disruption.

It could provide a plan of action on where to go to use a wireless network to receive e-mails via a laptop. Or by having the bank information needed to request a manual transfer in a conveyancing transaction.

The plan can be as in depth as you want but must be kept up to date and tailored to your business and its continuing needs.

For example, a business had just compiled a revised list of employees, critical suppliers and customers' telephone numbers that had fortuitously been removed from its office.

The following day, as a result of the Buncefield fire, access was not allowed to the premises. With the list, directors were able to contact the staff who came in early to inform clients of the situation and help locate temporary premises.

It was far removed from a business continuity plan, but it did enable contact with clients and staff.

Many professional regulatory bodies make it mandatory under their rules to have a continuity plan in place.

The most recent Solicitors' Code of Conduct is very precise on this point - that arrangements are in place for: The continuation of the practice of the firm in the event of absences and emergencies, with a minimum interruption to clients' business and the management of risk.' Insurance is considered as a necessary expense with no tangible return, unless there is a claim. Only then does the policy wording get the attention it deserves.

People believe that by taking out insurance they have provided themselves with adequate cover.

Unfortunately, this is not always the case. An insurance policy will provide you with financial support, subject to the limits as noted in the policy schedule, and the policy wording can be a minefield.

For example, a warehouse contract may specify that stock should be stored a certain level above ground. Failure to comply may prejudice a claim for damaged goods, regardless of the depth of the water.

There are even greater pitfalls for companies which have arranged insurance over the Internet. A generic policy wording is provided and the premiums are based on the information supplied.

Are the sums insured correct? Does the wording actually fit the business? How will a claim be settled? There could be delays in payments while the claim is being quantified.

A full independent review of the business should be carried out, followed by review of the current insurance arrangement.

Particular attention should be paid to definitions, sums insured and the scope of cover under the business interruption section. A comparison between the two will highlight any deficiencies in cover.

Combining business continuity management with the correctly arranged insurance, will put your business in a better position to survive all eventualities.

Norwich Union recently announced its estimate for the cost of the June floods at £235m, and an additional £165m for the July floods. The overall cost to the insurance industry is expected to exceed £1bn.

Insurance premiums will inevitably increase, as will excesses for flood damage in certain areas, or exclusions.

With a business continuity plan in place, insurers may look more favourably on the terms or the scope of cover they offer.

n Contact: David Dant, Insurance Audit, 01993 864583,