Fifty per cent of Europe’s mid-sized firms are ill prepared to deal with high impact risks according to new research conducted by Marsh, the global risk and insurance services firm. The findings show that only half of all European companies have formal plans to address risks to their businesses that they identify as having a high financial impact. Companies identified high impact risks ranging from increased competition to IT security failure or fire or natural disaster as well as threats to business continuity, which could result from acts of terrorism. 31 per cent of companies said management was likely to review risk less than once every six months and almost one in five admitted to doing so only on an ad hoc basis or ‘as needed’.
The research, undertaken both before and after the terrorist attack on New York’s World Trade Centre, showed no discernible difference in attitudes towards managing risk procedures following the events of September 11, 2001.
Commenting on the research, Kieran McHugh, deputy chief executive of Marsh Ireland, said ‘With contracting insurance markets, recessionary signals in many countries and a turbulent geopolitical climate all pointing to uncertain times, few mid-sized companies seem to be proactively seeking to eliminate, mitigate or transfer risk. Senior management of mid-sized companies are finding themselves increasingly held accountable for identifying threats to their business. It stands to reason that those who do not actively monitor risk are more vulnerable to a higher severity loss.’
Of the countries included in the research, UK and Belgian companies claimed to be the best prepared to deal with high impact risk. German companies were most likely to review their risk management procedures at least every six months while French companies were more likely to manage risk on an ad hoc basis. The research shows that mid-sized and emerging companies lag behind larger multi-nationals when it comes to developing formal procedures for identifying and mitigating high impact risks.
The research was conducted across six European countries, and among 600 companies in the chemical and pharmaceutical, manufacturing, municipalities, retail, IT & telecoms, transport and travel and tourism sectors. |
