How will Brexit change Risk Profiles across the Retail, Food and Beverage Industry?
Given the continuing uncertainty surrounding Brexit and its current date of 29 March, many businesses across the retail and food and beverage industry are changing stock holdings and logistics in preparation for a "No Deal" Brexit.
Many food manufacturers and retailers have been stockpiling ingredients or finished products, fearing a shortage of goods and additional disruption to already extremely lean supply chains. The UK Warehousing Association (UKWA) has reported increased demand for capacity and a shortage in warehousing space close to major cities as companies are increasing warehousing capacity in an effort to ensure stocks do not run low. Routing via different ports of entry will also change logistics arrangements.
In the longer-term, concerns about additional bureaucracy or delays at ports may encourage firms to keep more stock at warehouses in the UK and overseas than they normally would. These issues raise questions as to how this changes the risk profile of the organisation.
Have You Thought About Changing Stock Holdings And Logistics As Potential New Risks?
Risk profile changes and decisions made in response to dynamic market conditions can leave companies underinsured.
The adequacy of property and business interruption sums insured, as well as policy limits, should be stress tested to ensure they are sufficient to cover the higher warehouse value aggregations.
Setting the correct sum insured is of course one of the most important considerations when insuring property as it will determine claims settlements. Marine accumulations will need re-examination as any one vessel or conveyance limits could be inadequate. The total value of inland transit sendings may also increase.
Building Crisis Resilience
The reality is that no one knows exactly what is going to happen when the UK leaves the EU. It is clear, however, that organisations need to align their crisis resilience and risk and insurance programmes to their evolving risk profiles.
The crisis management team should have a pre-established and integrated plan that provides an overall response structure whilst also detailing how the team will work together. Such plans should be “Brexit” validated and rehearsed to ensure that each member of the team has a clear understanding of their individual roles and how the overall plan will be executed during an actual incident, thus minimising operational and reputational impact.
Whether an organisation can withstand shocks, protect shareholder value, and navigate disruptive change — with its financial condition, operations, and reputation intact — is determined less by the severity of the event than by the timeliness and effectiveness of the response. Considering new ways to adapt will ensure a business thrives.