Our second blog in this series on Brexit covers the importance risk assessment for your business in preparation for Britain’s exit from the EU. Alternatively, you can watch a video of this blog at the bottom of this page.
In our previous blog we highlighted the need for businesses, particularly SMEs, to be proactive in planning for Brexit. In this blog we will discuss what that could look like for your business.
The first point to address in assessing risk is the importance of context. So in what business context are we assessing risk? What is the likely scenario that we need to ‘model’ our risks in? With Brexit this is a complex and multi-layered scenario, which makes risk assessment more challenging. To expedite the risk assessment process, at Shaping Business, we encourage our clients to plan for the worst-case scenario. The logic of this is; if you can manage the risks effectively in a worst-case scenario, then any other less severe outcome is also manageable by the business.
So in our modelling approach we look at the hardest version of Brexit where the UK potentially fails to reach any agreement with the EU and has to drop back to WTO rules.
The second key part of risk assessment is to ensure you cover all key areas of risk. Many businesses focus on the sales part of the operation, but it is equally important to consider the supply side. This should cover raw materials and services, but also availability and supply of skills to the business. It is critically important that risk assessment is comprehensive in identifying all potential risks.
At Shaping Business we use a well-proven Enterprise Risk Management structure for evaluating and mitigating risk. Having determined the impact of each specific risk on the business, the final stage is to establish a treatment strategy to manage risk. This involves developing clear plans for how each risk will be managed by the business to reduce the risk impact to the business.
In the last 12 months, we have worked with business in the UK and EU to help them undertake a comprehensive Brexit risk assessment for their business. One of the consistent responses we get from our clients is that as a result of our approach, the business has clarity and a renewed sense of purpose on how to deal with this important issue going forward. As one client said, “the uncertainty creates fear, and that has a paralysing effect on any business.”