Southeast Asian businesses are ill-prepared to deal with the current haze crisis caused by Indonesian forest fires, Marsh Risk Consulting warns.

Marsh says while businesses may have crisis management and business continuity plans in place, they are untested and do not adequately cover such a long-term crisis.

Forest fires on the islands of Kalimantan and Sumatra have caused a state of emergency in Riau Province, and neighbours Brunei, Malaysia and Singapore have closed schools and warned people to stay indoors due to the haze.

Marsh warns that if conditions worsen, business supply and value-creating chains will be significantly affected, particularly where suppliers reduce their workforce or activities.

It says prolonged haze can take a toll on employees’ health, resulting in absenteeism and lower productivity, while poor visibility brings a higher risk of accidents resulting in injury and property damage.

Marsh advises businesses to review their risk management controls, human resource policies, crisis management plans and crisis communication capabilities.

Recommendations include defining achievable and measurable objectives in terms of minimum production and service levels, prioritising critical activities and keeping abreast of the crisis through media and government channels.

Human resources policies that should be adopted include flexible work arrangements, maintaining adequate stocks of respirator masks and providing health benefits beyond those stated in workers’ contracts and possibly above minimum legislative requirements.

Marsh also recommends cross-training employees, sourcing multiple suppliers and checking insurance policies to ensure proper coverage for haze-related damages.