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Climate change heats up risk assessment

The impact of a warming planet is seen as the single biggest emerging risk to business ahead of terrorism, bird flu, flooding and the credit crunch.

By Miya Knights, 27 Mar 2008 at 08:58

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The majority (87 per cent) of companies have cited climate change as a major threat to long term business success in the next 10 years - ahead of terrorism, flu pandemics, flooding, worsening economic conditions, government red-tape and outsourcing and offshoring.

There is also real concern over the risk that traditional sources of energy will diminish, while energy costs climb ever higher, with some 83 per cent of the 150 large UK and European companies surveyed suggesting it is likely rising oil and gas prices will have an adverse effect on the smooth running of their business. Worryingly, a further 60 per cent were not prepared for this eventuality.

This also indicates a gap in their knowledge regarding alternative sources of energy and suggests that they are awaiting an answer instead of pro-actively seeking a resolution, according to insurance broker Marsh, the survey sponsor.

"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," said Martin Caddick, Marsh's business continuity management team leader. "This lack of preparedness continues to be a major issue for European firms in today's turbulent times."

The survey also revealed concerns over the potential shortcomings and risks of outsourcing and offshoring. Nearly two-thirds (65 per cent) were worried that they have underestimated and poorly understood the associated risks, with 46 per cent admitting that - in some cases - the risks outweighed anticipated cost benefits. They were also unprepared for interruptions or breaks in their outsourcing and offshoring practices.

Furthermore, underperforming or failing suppliers now represent as big a threat to business as an internal failure or disruption. Some 61 per cent of companies are worried about the failure of suppliers not performing, with a third admitting they were unprepared for this risk.

The survey was conducted by Business Continuity Expo 2008, which is taking place 2-3 April at London's Excel exhibition and conference centre.