Companies are currently mired at their lowest level of risk and volatility preparedness for at least 10 years, a survey shows, just as Britain begins formal exit negotiations with the EU.
The latest annual study — by professional services giant Aon — found cyber crime, damage to brand reputation and disruptive technologies/innovation as the main risks facing global companies. However, just as pertinent to companies in Ireland and other parts of western Europe, risks from political events and uncertainties has jumped six places to number nine in the list of concerns.
Furthermore, developed nations that were traditionally associated with political stability — such as Britain and the US — are becoming new sources of volatility and uncertainty for companies.
But, while the awareness of emerging risks is growing amongst CEOs, senior management’s ability to control these exposures do not match expectations, the report noted. It said that risk readiness has declined from 39% to 27% amongst companies; the lowest since 2007.
“We are living in a challenging new reality for companies of all sizes across the world. There are many emerging influences that are creating opportunity, but at the same time, creating risks that need to be managed,” according to Rory Moloney, chief executive of Aon Global Risk Consulting.
“Businesses can no longer rely solely on traditional risk mitigation or risk transfer tactics. They must take a cross-functional approach to risk management and explore different ways to cope with these new complexities,” he added.
Though not directly linked, the report coincides with the UK formally beginning Brexit talks with the EU later today. Ahead of those talks beginning in Brussels, British Brexit Minister David Davis yesterday said there should be no doubt that Britain is leaving the EU and that the country is aiming to “forge a bright new future” where it is free to control its borders and pass its own laws and “do what independent sovereign countries do”.
He was referring to suggestions from France, last week, that the UK would be welcome to remain in the EU.
“We are not turning our backs on Europe. It’s vital that the deal we strike allows both the UK and the EU to thrive, as part of the new deep and special partnership we want with our closest allies and friends,” he said.
Meanwhile, British Chancellor Philip Hammond reiterated the UK’s intention of negotiating no hard border in Ireland.
“The question is not whether we are leaving the customs union. The question is what do we put in its place in order to deliver the objectives the Prime Minister set out in her Lancaster House speech of having no hard land border in Ireland and enabling British goods to flow freely backwards and forwards across the border with the EU,” he said in an interview with the BBC.
Back here, employers body Ibec has said that “maximum and reciprocal travel and other labour market entitlements between the UK and the EU, post-Brexit, must be a key objective of negotiations, given the shared social and economic benefits”.
In a 40-page Brexit strategy report, Ibec has called for Irish companies to be subsidised to the tune of €300m-€400m per year – by both the Irish government and the EU to help them trade through the disruption.
Sorting out potential disruption to the EU’s single aviation market, it added, is key; with it saying that “facilitating connectivity, post-Brexit, must be a priority”.
“The post-Brexit aviation regulatory regime must mirror the current liberalised open market access arrangements in order to minimise the disruption on travel and trade,” Ibec said
Additional reporting Reuters
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