Digital Transformation

Businesses show greater awareness of contingency planning

UK firms are increasingly aware of the need to improve their preparedness for unforeseen circumstances.

Businesses in the UK are increasingly making sure that they maintain adequate offsite backup to deal with any unforeseen circumstances they may face.

According to a new survey from Lloyds, more than 70 per cent of businesses believe their company is now better prepared to manage business and operational risks than they were two years ago.

Less than three per cent of the companies questioned said that they felt less prepared to cope with unforeseen circumstances than they were two years ago.

The report also found that there were "preparedness gaps" – defined as risks where the preparedness score was not as high as the priority score – in just two out of 50 individual risks.

This stands in stark contrast to the 2009 survey, in which preparedness gaps where found in eight out of 41 individual risks.

Lloyds’ report found that risks involving natural hazards and longer term environmental issues such as climate change still tend to be ranked as less important to board level executives, even though they could have a devastating impact.

Similarly, so-called "black swan events", which have a relatively small probability of happening but a high impact, were found to also figure less prominently on respondents’ list of priorities.

However, environmental and health risks increased in priority by the greatest amount this year despite remaining at a moderate risk priority level overall.

The report reveals that pollution and environmental liability is the top risk in this category, potentially reflecting the anticipated costs of rising levels of regulation.

Lloyds pointed out that the companies that could be hit the hardest by costs related to pollution and environmental liability are those operating in countries such as China, where current environmental regulations are behind those in the West but are likely to catch up in the not so distant future.