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Grant Thornton’s International Business Report, based on a survey of 7,200 business owners in medium to large privately held businesses across 32 countries, asked companies whether they had formal documentation in place for dealing with key risk areas such as the loss of suppliers/customers, loss of key personnel, disaster recovery and security of electronic information.

UK businesses appear to be doing well in preparing for risks emanating from modern and high profile threats. 77 per cent of businesses have documentation in place to deal with disaster recovery and for a major IT failure, putting the UK in fourth and fifth place respectively and comparing favourably with global (and EU) averages of 57 per cent (57 per cent) and 61 per cent (63 per cent).

In addition, 81 per cent of business have a plan in place for dealing with a breach in their security of electronic information, 80 per cent on the privacy of information and 73 per cent for the loss or destruction of property. These figures are good news for UK business and are above the EU and global averages; for example a meagre 55 per cent of EU businesses are prepared for a loss/destruction of property and 74 per cent of global businesses are ready for a breach in their security of information.

PR disasters 

Alysoun Stewart, Head of Grant Thornton's Strategic Services Group said: “Risk management should be an integral part of every firm’s strategic management, so it is encouraging to see so many UK businesses appearing to take the issue seriously. Identifying fundamental risks and taking steps to prepare for them is essential for minimising the impact of a disaster, which is key to the continuity of privately held businesses.”

While UK businesses scored well on these contemporary issues, they are somewhat less prepared in other key risk areas. Only 26 per cent of UK businesses have a formal procedure in place to deal with a potential reputation or media crisis compared with a global average of 35 per cent. Taiwan fared much better, topping the table with 61 per cent, followed by Turkey at 57 per cent.

“It is staggering to believe that so few business are prepared to deal with potential PR disasters. One only has to think of the food contamination scares involving Cadbury and Nestle and the lifelong associations they carry to realise the importance of the issue. Furthermore the recent product recalls from Mattel prove that businesses in any industry are susceptible to a potential media crisis,” continued Stewart.

Additionally only 32 per cent of UK business are prepared for a loss of key suppliers and 34 per cent for a loss of key customers, compared with global (and EU averages) of 43 per cent (43 per cent) and 47 per cent (43 per cent) respectively.

“It is worrying that UK businesses appear to be overlooking these fundamental business risk areas. While not as high profile or dramatic as some events, the sudden or unexpected loss of key personnel or a supplier can have a devastating impact on a business,” continued Stewart.

In addition, only 53 per cent of UK businesses have a formal mechanism in place in terms of succession planning. Although higher than the global and EU averages of 50 per cent and 41 per cent respectively, it still means that almost half of businesses remain inadequately prepared.

“Exiting from your company is one of the most important decisions a business owner can make and should take years of careful planning. Business owners who fail to recognise the importance of such preparation risk putting the successful continuation of their businesses in jeopardy,” concluded Stewart.

Grant Thornton International started a major annual survey of the attitudes and expectations of small and medium-sized businesses in 1992 called the European Business Survey (EBS). In 2003 the research project was widened to an international perspective covering medium-sized businesses and renamed the International Business Owners Survey (IBOS). Some 600 businesses in the UK were surveyed as part of the 2007 IBR.

Related links

• Grant Thornton
• International Business Report