London, UK – 22nd June 2009: A poll carried out for an Institute of Chartered Accountants in England and Wales (ICAEW) and SunGard Availability Services ‘round table’ discussion on Tuesday 16 June has found that supply chain issues and the impact of redundancies on business effectiveness have emerged as the two biggest risks to business operations as a result of the recession. The poll also showed that two thirds of organisations that responded believe they face greater operational risks than compared with 12 months ago. The round table was an ICAEW IT Faculty event organised in conjunction with SunGard Availability Services and was attended by representatives from a range of organisations including Investec, Smith & Williamson and YouGov. SunGard Availability Services is the pioneer and leading provider of Information Availability services and is the world’s fifth largest provider of IT managed hosting services*.
Over 70% of those polled at and shortly before the event, which was attended by Chief Financial Officers, Finance Directors and Heads of Operational Risk, said that the risk of disruption caused by supply chain issues has increased in the past 12 months, with concerns over the stability and resilience of smaller suppliers and partners in the difficult economic climate. The impact of redundancies and cutbacks on the effectiveness of the day-to-day operations was also cited by more than 50% of delegates as a growing cause of concern.
Quotes from the ICAEW/SunGard event
Roland Brook, Associate Director, Smith & Williamson, a delegate at the ICAEW/SunGard event on Wednesday, said: “Resilience has become much more of a major focus for our clients over the past year as many have had to contend with new threats such as supply chain disruption which have dramatically increased in the recession. There is now a real understanding across many levels of business that firms simply cannot afford any interruptions to critical business operations."
Asim Balouch, Group Operational Risk Manager at Investec, said: “It’s quite telling that most organisations are planning to increase investment in areas such as network and communications infrastructure, servers and security. Organisations are becoming increasingly aware that they cannot operate effectively without having a complete understanding of their data and the way that their IT systems underpins operational efficiency and integrity.”
Keith Tilley, managing director UK and executive vice president Europe for SunGard Availability Services, said: “As this research shows, the potential risks posed by the supply chain to the business have greatly increased in the economic downturn. All organisations need to assess the impact that disruption to their supply chain could have on their business and have plans in place to continue normal operations should a supplier run into problems. What’s encouraging about this research, however, is that resilience is now being discussed at the highest levels of decision making within more and more organisations, whereas before it was often overlooked and left to the IT department to look after.”
John Oates, IT Advisory Partner with Baker Tilly and Chairman of the ICAEW IT Faculty, whose members include Chief Financial Officers and Heads of Operational Risk at many of the UK’s largest organisations, chaired the event and said: “In the last 12 months we have seen operational risk rise up the business agenda as organisations identify new threats to their business, not least that caused by growing numbers of redundancies, both in terms of loss of knowledge and malicious attempts by departing employees to exact revenge on their employers. More than ever, organisations need to create contingency plans that are water-tight and workable, but also flexible enough to cope with the new and unexpected threats thrown up by the current economy.”
Research – Key Findings
- 65% of those polled believe that levels of operational risk have increased within the past year
- 70% of respondents believe they are at more risk from damaging supply chain issues (e.g. business partners going out of business) compared to a year ago
- Around half of respondents state that redundancies and cost reductions have impacted on effectiveness of day-to-day operations and increased operational risk
- A third of survey respondents say that risk and resilience issues are now discussed at Board level.
* Tier 1 research Spring 2009 - Managed Hosting Global Report.