On a Friday night, a factory burnt down in one of western Sydney's biggest industrial fires. On Saturday morning, the insurance assessor was at work - estimating the extent of damage and the insurance company's liability. On Monday as the business attempted to get back to work in what was the car park and a nearby office, the factory still smouldering, employees worried about their future, there was another challenge for management: to take a cheque from the insurer and walk away, or to try to save the business.
It was a large cheque - a weighty eight figures.
Amid the trauma of near-total destruction, with the uncertainty of so many families' livelihoods, the family that owns Doric Products decided to try to save the business. Looking back, Doric's general manager, Nigel Long, says if they had known the odds of a business surviving such a catastrophe, maybe they would have taken the cheque.
But this true story has a happy ending. Doric Products became a substantially different business because of the fire, changing from a large heavy engineering operation into a more streamlined light engineering and warehouse/distribution business. It is now a poster boy for productivity improvement and workforce engagement - one of the stories told in the Australian Industry Group's max360.com.au productivity program.
"The fire developed a change mentality in the business," Mr Long says. "If you can survive a fire, there's no problem changing a process or moving a bench. There is no hurdle too high. If there's an opportunity to change something or do it better, you can do it."
The renewed appreciation of the workforce changed and continues to change the company, making it more open from top to bottom. Change comes from all levels - the person at the top is not the font of all wisdom. The company's profit and performance is regularly discussed with the whole workforce. It is a great story.
But for the purposes of a column about business insurance, an important sidelight is that insurance issues were part of the stress in the aftermath of the fire.
The offer of a single cheque to walk away factored in the value of plant and equipment lost, but also an estimate of what business interruption insurance would cost the insurer in the months ahead. The longer the business continued, the less the offer of settlement would be.
Business continuity insurance, particularly for smaller and younger businesses, is a frequent area of under insurance or no insurance, but the odds of a business surviving a significant interruption without it are slim.
Continuity insurance pays wages, rent, fixed costs, advertising, estimated profit - all the stuff that would otherwise send a business broke when the customers can no longer walk in the door but the bills keep coming. Of course, the estimate has to be right in the first place of what the profit would be.
And then there is the bit called additional increased cost of working - renting and relocating to new premises if the front door has been obliterated. It is not just what has been lost that costs, it is the extra cost of getting re-established. Insurance companies think of everything - as long as you do, too, and measure it and are prepared to pay for it.
On one industry measure, only 31 per cent of small businesses have business interruption insurance. Apply the odds of surviving a significant interruption without it and that means about 30 per cent of small businesses won't survive such an interruption. Depending on the size and type of the disruption, an unquantified percentage don't survive with it.
By the nature of insurance and risk, Donald Rumsfeld's "unknown unknowns" play a role in the decision to insure or not to insure. For those happy businesses with the wealth to be able to self-insure - to have the money in the bank to be able to carry the costs of some of their known risks - those unknown unknowns can prey on the mind.
One proffered small business case study illustrates such a risk. Not as grand as Doric Products' life-changing fire, but a burst water main outside the front door that closed off traffic for a week: all the wages, the rent, the interest charges, none of the income.
When interviewing Mr Long for the Max360 project, a thought occurred: how good a tool or process would it be for any business to have a virtual fire? Mr Long thought it was a fine idea - much less painful than the real thing.
Michael Pascoe is a BusinessDay contributing editor.