By Daniel Hunter
Nearly two thirds (60%) of UK businesses have experienced an unexpected event that had a substantial negative impact on their company, and half of those admit that they had no plan in place at the time to deal with the consequences.
The Risky Business Report from Allianz Insurance has found that of those businesses that have experienced a negative event, 96% subsequently changed how they identified, planned and managed business risks. But the report warns that a ‘learning from mistakes’ approach could mean businesses are undermining their own opportunities by not being prepared for risks that could impact plans for growth.
According to the report, the principal negative events companies have faced are customers or clients not paying (23%), followed by accidental damage such as fire or stock damage (17%), suppliers not providing goods on time (16%), natural weather disasters (16%) and faulty stock (13%). Yet it finds that those who do plan for risks such as these have the greatest chance of delivering growth.
The findings suggest that British businesses are feeling positive about the future — nearly one in five (18%) say their business has never been in better shape, surprisingly 23% say they have benefited from the recession and 38% say they are hopeful for the future. The most positive companies seem to be embracing the concept of innovation and risk management as two sides of the same coin and not seeing risk management as stifling opportunities for growth.
“Businesses that are able anticipate the risks they could face and put into place a plan for how they would manage them should they happen, will be better equipped to continue in the face of adversity," Andrew Torrance, CEO at Allianz Insurance said.
"Having the discipline to do this also creates a firm foundation for businesses looking to achieve sustainable growth through, for example, innovation, expansion into new markets and new product launches.”
The report also makes it clear that the approach of UK companies to risk management varies significantly. When it comes to mitigating risks in a larger business, having a plan for growth is more important to those with a turnover over £500m (39%), than for those with a lower turnover (29%). As businesses grow in size their confidence in taking calculated risks grows (6% to 11%), as does the significance of risk management within the organisation (32% to 67%).
“Whatever a business’s size, leadership style or industry, a pragmatic, flexible approach to risk management can help it thrive," Andrew Torrance added.
"Having the support to get the right thinking and processes in place is key and utilising risk management expertise will help any business to prosper by making its operations more robust and better able to support its plans to innovate and grow.”