All businesses devote substantial resources to planning, budgeting, logistics and marketing to ensure the best results. However, there are elements totally outside the control of a company’s executives that can have a major influence on profitability. Unexpected events, often in apparently unrelated areas, can cause serious knock-on effects which in turn have the potential to wreck even the most carefully prepared business plans.

Strike action by an independent third party upon whom a company depends epitomises the unexpected event. Any strike of longer duration than a few days is almost certain to affect the business. The potential for disaster, particularly in a protracted dispute, is a worrying prospect especially in these days of ‘just-in-time’ supply chains.

Very few companies are capable of total self-reliance in their business operations; most rely to a greater or lesser extent on the performance of others. Whether this involves the supply of raw materials or components, transportation or the supply of finished articles for sale, or the services of utilities, the interruption of that supply chain can be financially disastrous. The potential losses increase when the completion of a specific project or contract is involved.

The effect of a strike elsewhere is rarely considered until the strike is imminent, by which time it is too late to arrange insurance.

Given the rapidly changing worldwide political scene, what was at one time considered unthinkable has now become a recognised fact of life. Strike action is seen as a force for change and the list for potential areas of conflict has grown.

Although the frequency of strikes in Britain has fallen in the past, following tough labour legislation and fear of unemployment, employees are more likely to feel confident about striking to improve their pay and conditions now that the Government has again tilted the legal balance in favour of employees. Add to this an increasing influence from Brussels and levels of labour disruption may indeed be on the rise.

Strike insurance should be considered at a time when strike action is not expected, rather than being a probability or a certainty. Where strikes or industrial action taken by a named independent third party could directly or indirectly affect the Assured’s business operation, supply chain, market place or contract, or when it reduces the capability of the Assured to meet their contractual obligations, insurance should be considered as a necessity.

The effects of strike action may take the form of loss of profits, loss of revenue, additional costs of financing, delay penalties, liquidated damages or loss of rental income as well as additional cost of working or the cost of finding alternative suppliers to name but a few.