18 March 2019

Commercial Risk Europe: Frustrating Brexit deadlock highlights importance of risk management, says Ferma

The ongoing uncertainty surrounding Brexit highlights the importance of professional risk management to prepare organisations and ensure business continuity, Ferma said this week after voicing “frustration” at the current deadlock in UK parliament.

Following discussions with corporate risk managers, the federation said most risk management plans are working on the assumption of a no-deal Brexit and detailed a range of mitigation measures in place. It also said Brexit is just one political risk among others and from many group-level perspectives, is a medium-low risk.

The UK parliament last week voted to reject the current Brexit withdrawal agreement between the EU and UK for a second time, and in favour of an extension to Article 50. It is not yet clear how long the UK would like to extend the process for.

Jo Willaert, president of Ferma, said the rejection of the withdrawal agreement and request for an extension of Article 50 “prolong and aggravate the uncertainty”.

He said there is “frustration, and a certain fatigue about the continuing disorder and lack of clarity”.

However, Ferma’s president said this simply “confirms the necessity” of professional risk managers with the expertise to “prepare for various scenarios and support the implementation of appropriate measures to ensure business continuity whatever the post-Brexit business environment”.

Ferma said discussion with several leading risk managers in Europe shows that most are basing Brexit preparations on the assumption of a hard Brexit. This is especially true in critical sectors like healthcare, where continuity of medical supplies to patients is at stake, it added.

This echoes the sentiments of Stephen Day, senior vice-president, supply chain, global operations at publishing company Pearson. He told Commercial Risk Europe that given the amount of ambiguity around Brexit, preparing for no-deal, or the worst-case scenario, is the only real option.

“We have decided to plan for that scenario regardless of what will actually come to pass,” said Mr Day.

For physical operations, this has seen his company preparing to ship goods to northern UK ports rather than Dover, in anticipation of long traffic jams on the south coast.

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