Nimble Is The New Normal As British Multinationals Acclimatise To Uncertainty
LONDON, 18 May 2017 –
- Despite operating in a moderate to severe risk environment, UK businesses are acclimatising to challenging conditions with 71% reporting they are 'confident or very confident'
- Looking ahead six months, 85% of businesses think the risk environment will have stayed the same or improved; though Brexit and sterling concerns mean confidence dials back 10 percentage points
- Boardroom risk is set to become the top concern for business leaders in Autumn 2017
In a world turned upside down by US policy turnarounds, a snap UK election creating doubt around the UK's Brexit strategy and ongoing disruption to trade in Asia following the collapse of the TPP, multinational British companies are growing comfortable with uncertainty.
Despite having to operate in what 70% regard as a 'moderate to severe' risk environment dominated by concerns over economic, political and technology risk, a resounding 71% of UK businesses report they are confident or very confident. These are some of the key findings of the CNA Hardy Risk and Confidence Survey, May 2017, launched today.
Confidence is strong but the trend is weakening
Asked to look ahead six months to Autumn 2017, 85% of businesses think the risk environment will have stayed the same or improved. However, concerns over the impact of Brexit, ability to access talent and to export to new markets mean confidence dials back slightly, with only 61% of businesses predicting the same high confidence levels as in Spring 2017 – a decline of 10 percentage points.
CNA Hardy CEO Dave Brosnan comments: "In a world where forecasting is becoming increasingly difficult and order books never extend more than six months ahead, nimble is the new normal."
"With the Autumn 2017 dip in confidence, we see business leaders are focusing squarely on agility as the path to growth. They are cutting back on traditional hiring and instead leveraging the new 'gig' economy to fill the talent gap. We also see businesses prioritising new technology and R&D to boost operational efficiency, innovation and the power to disrupt others."
36% of businesses said they are 'hiring with caution' while another 21% were 'cutting back or putting hiring on hold'. 81% of businesses said they are actively pursuing investment in R&D including technology related products, services or processes.
Boardroom risk set to overtake economic/market risk as businesses look ahead
Survey results reveal that the big three risks impacting business confidence in Spring 2017 are economic, political and technology risk.
Economic/market risk was the largest concern for just under one third (31%) of business leaders, with respondents' concerned about the impact of volatility along with intensified competition and market stagnation. Political risk (defined as the risk of unpredictable or unsupportive government policy) was top of the list for a further 26% of respondents. The third most frequently cited risk by respondents was technology at 16%.
However, as businesses look ahead six months the picture changes. Boardroom risk rises to the fore with 46% of business leaders anticipating an increase in boardroom risk. Regulatory and reputation risk are also moving centre stage – eclipsing the market and economic risks which were dominant in Spring 2017. At the opposite end of the spectrum, only 27% of businesses believe technology risk is likely to increase and over two thirds (67%) believe it will stay the same or reduce.
Brosnan comments: "Looking six months ahead, boardroom risk is the category where business leaders foresee the greatest risk of deterioration and the lowest hope of improvement. By contrast, the risk which companies worry about least in Autumn 2017 is technology risk. This either suggests businesses are already factoring risk into their planning, or, more concerningly, that technology risk is still not commanding the attention it requires in the boardroom."
Talent and tech are swing factors for business success
For many leaders CNA Hardy spoke to, as part of its research with 500 UK-based multinationals, talent and technology are the swing factors in business success.
Brosnan comments: "Strikingly, every business we spoke to in the course of this research saw itself as a 'people business', irrespective of sector. Having a motivated team and access to the right kind of talent are fundamental to business confidence today and to businesses' sense of how well placed they are to succeed in six months' time. Continued access to talent is therefore a key concern for businesses going forward, particularly in the light of Brexit.
"Business leaders also identified technology as a swing factor in business success. It's the key to agility, speed of adaptation and therefore ability to compete. But on the flip side, tech failure or cyber risk in terms of data security, fraud, corruption, viruses, hacking, privacy, brand trust and reliability are persistent worries."
Writing on the wall for insurers
Reflecting on the findings of the survey and their implications for underwriters, CNA Hardy Chief Underwriting Officer Patrick Gage comments:
"As insurers, we know that when conditions are difficult and businesses under stress, the value of risk transfer becomes all the more acute, particularly for smaller and mid-size UK multinationals exporting more aggressively into new markets. If we are to partner effectively with our clients, it is imperative that we understand how confidence is impacted by risk concerns and know where the pressure points are."
"While we cannot help companies resolve all the issues that they face, we can leverage the insight from our global business to pioneer new consultancy and risk engineering solutions to mitigate challenges in the boardroom, on the shop floor and across the supply chain domestically and overseas. We are also investing heavily to position ourselves to support businesses as new technology renders them both more efficient and more exposed to risk."
About CNA Hardy
CNA Hardy, acting through Hardy (Underwriting Agencies) Limited and CNA Insurance Company Limited, independent wholly-owned UK subsidiaries, are a leading specialist commercial insurance provider for clients within both the Lloyd's and company markets. For more information, please visit CNA Hardy at www.cnahardy.com.
Serving businesses and professionals since 1897, CNA is the eighth largest commercial insurance writer and the 14th largest property and casualty company in the U.S. CNA's insurance products include commercial lines, specialty lines, surety, marine and other property and casualty coverages. CNA's services include risk management, information services, underwriting, risk control and claims administration. For more information, please visit CNA at www.cna.com. "CNA" is a service mark registered by CNA Financial Corporation with the United States Patent and Trademark Office. Certain CNA Financial Corporation subsidiaries use the "CNA" service mark in connection with insurance underwriting and claims activities.
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