Thomson Reuters suggests taking a practical approach to enterprise risk and now, following the UK's 'leave' vote last month, companies need to reassess certain key areas of their business model.
A white paper by Thomson Reuters on enterprise risk in the business model looks at risks that can prevent a company from achieving its objectives – and at the tangible and practical approaches to risk management. The paper proposes nine components that make up business models, including partners, activities, customers, resources and channels, etc. Regulatory change is one of the biggest factors that influence business models. The paper states: “Changes in regulation often force firms to revisit their product/service offerings alongside the customer segments that they serve and the way in which they are served.”
Identify new emerging risks
Following the outcome of the UK's 'Brexit' referendum, some change is almost certainly on the horizon for corporates with operations in the UK. The change may be regulatory, although in the short-term corporates are likely to be facing financial market risk and wider economic uncertainty. In her blog on the risks companies are facing after Brexit, Ellen Davies, director of workflow proposition marketing at Thomson Reuters’ Financial & Risk division, writes about the need for companies to review their business models in light of the changing circumstances. She writes: “Given the volatility of the current climate — both economically and politically — it makes sense to take an enterprise risk management approach to business model review. This will help your organization ask the right questions and potentially identify new emerging risks.”
Five questions corporates should ask post Brexit
In addition, Davies, suggests five specific questions that companies should now be asking themselves:
- Which jurisdiction are the partners headquartered in – and how will it be impacted by Brexit?
- Which jurisdiction do the partners have operations in – and again what is the impact of Brexit?
- What nationality and right-to-work do key stakeholders in the partner’s business have – will this be changing as a result of the change in the UK’s status?
- Are there specific legal or documentation issues in contracts with the partner that may be impacted by the Brexit? What national law was the contract framed under?
- Is the partner considering making significant changes to its own business model as a result of Brexit?
CTMfile take: It won't be possible to answer all of these questions yet but it's a good idea for CFOs and treasurers to start thinking about the tangible possibilities of Britain leaving the EU, which will also have a financial impact.
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