What’s your continuity plan for the Euro?

In December 2011 we were looking for sensible business continuity advice for business continuity planners around the potential collapse of the Euro.

We were surprised we couldn’t find more authoritative sources of advice aimed specifically at continuity planners, who are well-placed for a significant role in any organisational planning for such an event , but were pleased to find a few articles that may help us start a useful discussion:

What should business continuity planners be doing while the future of the Euro is under debate?

We’d appreciate your advice and thoughts on this issue, so we thought we’d start the ball rolling by summarising the articles we found.  We hope you’ll join the conversation by commenting at the end with your own thoughts, concerns, and an indication of actions you’re taking for your own organisation.

As business continuity planners, we may be more used to considering the way forward in times of uncertainty than other members of our organisation’s community.  We may also appreciate more than most that the lack of a reliable crystal ball often leads to one of two outcomes: under-planning or over-planning.  For this reason, we summarise a few relevant articles and ask the community to debate the way forward.

[Note: we've provided copious links to all the sources in this article.]

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Dr Chodechai Suwanaporn is vice president of economics & energy policy at PTT and his article appeared in Thai newspaper, The Nation, titled: “Eurozone Breakup: The Armageddon of Finance.

He suggests applying that traditional mantra: ”Hope for the best, but prepare for the worst.” and, when asked what businesses should do now, he suggested:

  • Reviewing the impact of the potential risk within the context of the current risk management profile
  • Considering the company’s exposure to the Eurozone: finance, cash, revenue assumptions, clients and supply chains.
  • Preparing for possible supply chain disruption – possibly with precautionary inventories of critical items and identification of alternative suppliers
  • Examining which clients may experience difficulties that could impact payment or contracts
  • Considering contingencies arrangements for possible unrest in Euro countries, and consider security and other needs.

Meanwhile, Canada’s National Broadcaster, CBC, said Canadians should worry too, as knock-0n effects for Canada may include increased difficulties with trade, unemployment and even a possible recession.  According to opinion from one of Canada’s universities the potential impacts, such as lack of confidence in the ‘new’ currencies and defaulting governments, may spark a a major economic crisis: the banking system is interconnected so a failure in Europe is likely to affect the rest of the world with potentially serious consequences for Canada.

Of course, these are opinions from outside the Eurozone.  So what of the advice for those inside?

Journalist Chris Mercer asked organisations in the beverage industry what they’re doing about the issue for his article, Europe: Drinks companies forced to consider euro break-up.  He tells us the following:

  • Heineken is following the euro crisis closely and “updating business continuity plans accordingly”.  They have increased their efforts to pool cash resources in financial stable countries outside the Eurozone in case “money transfers get hampered”.
  • Diego’s Andrew Morgan told the Financial Times they were considering how a eurozone break-up would affect business. “With countries coming out of the euro, you’ve got massive devaluation that makes imported brands very, very expensive.”
  • Pernod Ricard’s spokesperson suggested the break up of the Euro wasn’t a scenario they’d actively considered

The Irish Independent reports that Central Bank of Ireland has considered plans for a eurozone breakup, despite advice from the European Central Bank that it would be “absolutely imprudent” to do that.  The Central Bank apparently declined to comment to them, “stressing that it was only printing the Euro”.

Meanwhile, Business Credit Management UK state that “Global corporates including Apple, Microsoft, Sony, L’Oreal and Pfizer, are among companies attending the two “Trade Through the Euro” events [in London and Dublin]  to discuss how to tackle the impact of the euro zone crisis on trading internationally.  The intention of those events is to assist businesses drawing up contingency plans.

Gartner have  also stepped up and advised Chief Information Officers to “act immediately to protect their enterprises from the risks of government and bank default, the euro breakup, counter-party bankruptcy and employee and customer distress”.   (The document is available on the above link if you register with their website.)

Banks, and some businesses, are playing what the Financial Times calls ‘war games‘ (and we may call scenario-planning): their video report is well worth the 3 minute watch.  They also advise that major organisations are minimising risks with their cash reserves; that Siemens has created its own bank so it can deposit funds with the European Central Bank; but that companies like Volkswagen have concluded that the overall impact wouldn’t be so negative to a mainly exporting firm.  However, they also suggest that many companies believe stability is most threatened if it becomes known that companies are contemplating the worst… yet, as business continuity planners, that’s usually exactly what we’re paid to consider, and what we’d expect good business continuity planners to be doing robustly.

Which brings us nicely to the first “do nothing” advice.  It comes from an Irish Independent article about what those with savings in the Euro might consider doing with their money, “amid much speculation, scaremongering and ill-informed chat about the collapse of the euro“.  Option 1 was ‘Do Nothing’ and they considered this the most logical option: “often in a crisis, it is best to remain calm, rather than being panicked into action.”  However, recognising this may not suit everyone, they went go on to discuss the options of opening foreign bank accounts in a “more secure currency”, investing in sterling or US dollars, or buying government bonds in stronger economies.

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Apart from those articles [and a book called Crash Proof 2.0 which we haven't had time to review!] the direct advice for business continuity planners is scarce. So we invite you to join the discussion by commenting below:

What should business continuity planners be doing while the future of the Euro is under debate?

Are you war-gaming or scenario-planning with your organisation?

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