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Identifying organizational exposure to Brexit

Charlie Maclean-Bristol looks at some steps that organizations can take to identify areas of exposure to Brexit risks.

While the machinations of the politicians take the headlines, businesses are faced with assessing the potential impact of Brexit on their organizations. If you haven’t started a risk assessment looking at your company’s exposure to Brexit, I suggest you do so. I recommend looking at what is your worst case, best case and most likely case; then develop appropriate risk mitigation measures. I think that once this is done, you should then start to look at your business model, supply chain and your organization’s exposure to Brexit. As you look at things in detail, you may find your exposure is deeper than you might intitally think...

Some issues you may want to consider include:

  • Is your business model dependent on access to the EU market as it is at the moment? If so what measures can you take to reduce the impact? For example, Easyjet is very dependent on the EU Open Skies Agreement and so is thinking of moving its headquarters to Europe as the UK may not be part of that agreement in the future.
  • 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 on your pension funds, investments and the ease of doing business with Europe.
  • How many EU staff does your organization employ? What might be their status if the UK leaves 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 home anyway, fearing they may have to do so in future and preferring to take control themselves; or feeling unwelcome within the UK. This could result in your organization haemorrhaging experienced and skilled staff.
  • 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.
  • If you are using IT cloud services or software as a service how might these 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 may 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.

The author

Charlie Maclean-Bristol FBCI is Director of Training at PlanB Consulting.

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