As businesses scramble to work around Eskom’s sporadic enforcement of load shedding, a risk expert has warned that the country’s ongoing electricity crisis may have a detrimental effect on businesses that have not implemented any form of risk management strategy. The warning comes amidst suggestions that even if the power grid is managed appropriately and South Africans are sparing in their use of electricity, load shedding will likely still be a reality for the next 12-18 months. Such a scenario will have an untold impact on the business sector, particularly smaller businesses.

According to George Davis, the head of construction and engineering at Risk Benefit Solutions, the bottom line was that every facet of businesses was being affected by the continued power cuts. Whilst production was being halted for over two hours on a regular basis, employee salaries and other expenses were still adding up during that period.

“It is critically important to understand the key message is that insurance does not cover any losses such load shedding, or that sort of thing,” he explained.

There are several other additional risks that go hand in hand with the load shedding crisis. Davis said that whilst many businesses were seeking alternate power supplies such as backup generators or Uninterruptible power supply (UPS) systems, there was still a risk of power surges when the supply switched from public utility to backup sources. In the case of factories, this could have a severe impact on machinery and equipment.

In order to work around this, he said it was imperative that businesses had an appropriate strategy to deal with such risks.

“In order to prevent those sorts of losses, it is incredibly important to have a strategy for power surge protection in your machinery,” he said.

For companies not financial strong enough to afford generators or UPS systems, Davis said they would have to ensure they could work around the blackout period. He advised those in the business sector to seek people with the proper qualifications to assist them with risk management.

“The problem is that you are affected at your bottom line. It is either the loss of product or loss of customers that will affect your bottom line,” he said. VOC (Mubeen Banderker)