Assessing the drivers of flood risk reduction actions of businesses

Climate change and socio-economic development are expected to increase flood risk. Businesses can prepare for increasing flood risk by taking flood damage mitigation (FDM) measures, or by purchasing insurance. However, little is known about the predictors of the uptake of various FDM measures by businesses. Our study uses survey data after flooding in the Netherlands in 2021 to understand the drivers of FDM actions of businesses. Our results indicate that insured businesses are neither significantly more or less likely to take FDM measures compared to uninsured businesses. Therefore, we do not see evidence of moral hazard or advantageous selection. Positive predictors of FDM uptake are receipt of early warnings, searching for information about flood risk, prior flood experience and feelings of responsibility for taking FDM measures. Our results show that insurers can stimulate FDM uptake of businesses via early warnings and information provision.