Climate change will be considered a major threat to business in the next ten years according to a survey on “emerging risks” conducted by Business Continuity Expo and sponsored by Marsh, a global insurance broker and risk adviser. 87% of businesses see climate change as the single biggest threat in terms of risk assessment and the effect it could have on their business’ 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 conducted among 150 major U.K. and European companies during last year.
Also of great concern to 83% 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 5 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.
Business continuity practitioners 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, 65% are worried that they have underestimated and poorly understood the risks associated with outsourcing and offshoring with 46% 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 61% 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.
Following the floods and storms over the last two years, 74% of businesses see adverse weather as a real threat of which 70% are prepared. However, 40% 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.
Martin Caddick, Leader of Marsh’s Business Continuity Management team, said, “Climate change and energy risk consistently ranked 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.
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