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Brexit - identifying your exposure

Blog post   •   Jul 06, 2016 16:31 BST

The uncertainty regarding Brexit continues and I have been pretty much glued to the news, watching each twist and turn of the aftermath including this week’s EU summit, the disintegration of the Labour party, and the start of the Conservative leadership election. Being in Scotland, there is the added dimension of Scotland’s place in Europe and Nicola Sturgeon’s overture to EU leaders to try and ensure that Scotland remains within the EU. As I have heard in the news, there is no playbook for Brexit or contingency plan - we live in uncertain times and we do not know how this will end.

From a business continuity or crisis management point of view, Brexit is reinforcing what we have always said. If there is an identified threat, it is a good idea to have a contingency plan. It appears that there isn't one, and nobody has thought about it. Secondly, it is good to have a crisis management team who can manage the incident. Until Labour and the Conservatives sort themselves out, we don’t have a team of people to manage the incident. The chaos and uncertainty we have at the moment is a symptom of not having a team to manage the incident or a plan to work to!

When I wrote last week’s blog (Brexit - the opportunity?) I suggested that you carry out a risk assessment looking at your company’s exposure to Brexit. If you haven’t done already, I suggest you do so. I recommend looking at what is our worst case, best case and most likely case, and then develop appropriate risk mitigation measures.

I think once this is done, you should start to look at your business model, supply chain and your organization’s exposure to Brexit. I think as you look at things in detail, you may find your exposure is deeper than you think.

Some issues you may want to consider:

1. Is your business model dependent on access to the EU common market as it is at the moment? Easyjet is very dependent on the EU Open Skies Agreement and so is thinking of moving its headquarters elsewhere in Europe as the UK may not be part of that agreement in the future. The agreement is also held with the USA, and so it may affect transatlantic carriers such as BA and Virgin.

2. As the UK is a major financial centre, how might changes to the status of UK financial intuitions impact your organization? This may have a knock on impact to your pension funds, investments and the ease of doing business with Europe.

3. How many EU staff does your organization employ? What might be their status if we leave the free movement of people within the EU, might they have to go back to their country of origin? I very much hope this is unlikely, but we should plan for this risk. Secondly perhaps many of them may return, fearing this may happen or feeling unwelcome within the UK, leaving your organization haemorrhaging experienced and skilled staff.

4. Have you mapped your supply chain exposure to Europe? There is the possibility of having to revert to World Trade Organization Tariffs. Does your organization understand what these are and what the impact would be of additional cost on your business model? As there may not be free movement of goods, this could delay delivery of goods or parts to the UK and the delivery of your products to customers within Europe.

5. If you are using IT cloud services or software as a service how might they be affected by Brexit. Might the UK government say that all personal data should be located within the UK as opposed to it being housed within the EU? This could be an opportunity if you can house your company’s personal data anywhere! If data must be housed in the UK this could lead to an increase in price of services as demand will go up and it will take some time to increase supply.

There are so many questions and at the moment very few answers! As a start, I suggest you try to understand your organization’s exposure to Brexit and once this is known, then you can begin to put into place how your organization may deal with the different possible impacts.

Charlie Maclean-Bristol is a Fellow of the Business Continuity Institute, Director at PlanB Consulting and Director of Training at Business Continuity Training.

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