Early indicators show a downturn in various sectors of the UK economy since the vote to leave the EU. Several interpretations have been offered.
- It is a fulfilment of the most pessimistic predictions of the Remain campaign. We are heading for a recession.
- It was coming anyway. The Good Times created by George Osborne are over. We are heading for a recession.
- It is just a blip and everything will be OK soon.
Personally, I think it is too soon to say: I will wait and see.
For some none of this matters. They say:
- It is only certain sectors that will be affected: those which do business with the EU. These are mainly big businesses.
- You will be unaffected if you are in a business which trades only within the UK, especially small businesses.
- It will make no difference if you are in the Public Sector, are unemployed or retired.
It was this kind of thinking that led some people to vote Leave. They thought all the benefits of EU membership were felt only by the privileged few.
I have argued previously that this was unsound thinking and I wish to say so again. Economic forces are increasingly interconnected within the UK and indeed throughout the World. One thing leads to another. If there is a big downturn in any of the major sectors of the economy it will affect others remarkably quickly. House prices, rents, food prices, wages, job opportunities, pension funds, tax revenues, public spending – all will affect one another.
So we should all be concerned. I hope it is just a blip and I hope the Government will take sensible measures to protect the economy.
What has any of this to do with Risk Management?
One of the biggest and least acknowledged risks these days is the Supply Chain Risk which I have mentioned in previous blogs. It is worth mentioning again. Managing the risks in your business is a good start, but to really load the dice in your favour you need to look at the risks in and around the businesses you rely on for your supplies and support: purchases, IT, transport, security, property maintenance, and professional services of all kinds. Where would you be if any of them were to let you down?
What can you do about the way someone else manages their business?
- Think about the ‘what ifs’ and have contingency plans.
- Try not to be too reliant on one supplier.
- Think about how they manage risk when choosing a supplier.
Perhaps a chat with a Risk Management consultant would be a help?
You know where to find me!