As the October 31st deadline for a Brexit deal draws near, the specter of post-Brexit consequences is becoming more and more real. Recently, a leaked document stoked fears in the UK and around the world after predicting dire ramifications for a no-deal Brexit. But Brexit is not the only election outcome causing turmoil. The global trend toward economic nationalism in recent years is poised to catastrophically impact global economies.
The leaked Brexit memo outlined key concerns around food, fuel and medicine shortages, as well as borders requiring added layers of security and procedural oversight leading to extended goods shipment and supply delays. Though the Brexit saga has been ongoing for several years now, it is clear that governments and companies alike have not fully prepared for what this historic vote actually means when implemented.
The Freight Transport Association further highlighted this when they expressed utter shock at the release of the memo and its content. A spokesperson from the organization was quoted stating that none of these concerns had been voiced in prior discussions with UK government officials. This leads one to wonder if the association also neglected to investigate the risks associated with this shift in regulation. Unfortunately, they are not alone.
How many firms have fully contemplated what their business model looks like under this global trend towards economic nationalism? Ask farmers in the US how well prepared they were to deal with a prolonged trade war between the worlds two largest economies. Farmers have seen their largest markets dry up overnight and are now trying to figure out how they can pivot as economists and political pundits fear an imminent economic recession.
While the world grows more connected, governments and populist sentiment seem to be reverting inward; countries are closing their borders and looking towards nationalist interests. In this new uncertain reality, traditional frameworks will be tested if not out right shattered. Brexit and the leaked memo highlight a hard truth that many individuals may not be ready to face. Corporations however, cannot simply hide from these harsh truths. They have no alternative but to confront the uncertainty of this new geopolitical landscape if they wish to stay in business. The impacts of these new risks need to be evaluated in the board room and integrated into an organizations enterprise risk management strategy to ensure business continuity. These types of drastic shifts in social governance will have knock-on effects through the global markets, disrupting supply chains, and impacting every corner of the globe.
While the end game is yet to be determined with Brexit, one thing is abundantly clear – in order for organizations to withstand indirect collateral damage, focused investment in resiliency and risk agility is absolutely necessary.