Climate change will be considered a major threat to business in the next ten years.
That’s according to a survey on “emerging risks” conducted by Business Continuity Expo 2008 and sponsored by Marsh, the insurance broker and risk adviser. Some 87pc of businesses see climate change as the single biggest threat in terms of risk assessment and the effect it could have on their businesses future growth, with many at a loss as to what can be done in order to prepare or plan for this eventuality. This threat to the continuity and long-term success of their business is ahead of terrorism, pandemic flu, flooding, the credit crunch, government red-tape and outsourcing and offshoring. The survey was among 150 major UK and European companies.
Also of great concern to 83pc of businesses is the risk that traditional sources of energy will reduce and the cost of oil and gas will rise so significantly over the next five years that it will have an adverse effect on the smooth running of their business. Sixty percent are not prepared for this eventuality and see it as a major threat which indicates a gap in their knowledge regarding alternative sources of energy and are awaiting an answer instead of pro-actively seeking an answer.
At next week’s Business Continuity Expo, which runs at London’s Excel on April 2 and 3, one of the most popular seminar and keynote sessions is expected to be around the issues of business continuity and outsourcing. This is mirrored in the concerns of business continuity practitioners who have responded to the survey and have grave concerns over the shortcomings and risks of their own outsourcing and offshoring practices.
Although these have been undertaken as a means of cutting costs, 65pc are worried that the they have underestimated and poorly understood the risks associated with outsourcing and offshoring with 46pc admitting that in some cases the risks outweigh the anticipated benefits and they are not prepared for interruptions or breaks in their outsourcing and offshoring practices.
It would appear that the underperformance or failure of suppliers now represents as big a threat to business as an internal failure or disruption as 61pc of companies are concerned about the failure of suppliers not performing, with a third admitting they are unprepared for this risk, which demonstrates that supply chain risks are underestimated and businesses lack the necessary understanding to deal with them.
The crisis over subprime lending and the credit crunch is a hot topic at the moment and a number of financial services have found themselves in difficulty as a result. The survey found that 33pc of businesses believe they will be affected by subprime lending and the credit crunch of which 40pc are not prepared for the effect it will have on them. Forty four percent of large companies in the financial sector consider this to be a threat yet only 25pc are prepared for this to hit them.
Sixty per cent of businesses believe there will be a terrorist attack on UK soil within the next 18 months with 73pc of these companies having planned for such an event. Seventy five percent of large manufacturing companies who said they thought there would be a terrorist attack admitted they had not prepared or planned for such an incident.
Following the floods of 2007 and the recent storms, 74pc of businesses see adverse weather as a real threat of which 70pc are prepared. However, 40pc of small manufacturing firms and 50% of large retails firms who see adverse weather as having a significant effect on British business admit to not having a plan in place.
What they say
Martin Caddick, Leader of Marsh’s Business Continuity Management team, said: “Climate change and energy risk consistently rank among the biggest challenges facing global businesses in 2008. While the majority of firms surveyed have accurately identified the major risks that could affect their businesses, fewer seem to be successful in tackling them head on. This lack of preparedness continues to be a major issue for European firms in today’s turbulent times.”
Marsh is exhibiting at Business Continuity Expo and participating in a number of seminars including “How to Win over the Board for Business Continuity” Marsh will be joining forces with Cadbury Schweppes and the CBI to offer their wisdom on how to convince the board of directors to take business continuity and risk management seriously.
For the full findings of the survey:
Visit Marsh on stand 220 at Business Continuity Expo on April 2 and 3 at London’s Excel. For free entry and further information about Business Continuity – The Risk Management Expo and the co-located paid-for Business Continuity Conference, visit the website:
