84% businesses experienced some kind of disruption

Only one in six businesses had disruption free run in the past 18 months. This is what Business Strategy Consulting from Belgrade found from the survey run among business leaders, managers, professionals and entrepreneurs from Europe, Africa, Asia and North America.

Based on the survey responses it appears that running a business lately becomes more risky and challenging for managers even in the presence of modern business tools for strategy planning and risk management best practice. What to say about those businesses who don’t analyse potential threats or mitigate risks regularly leaving everything to “superior” fire-fighting skills?

I recently wrote that risk is part of everyday life which applies to business too. The only efficient defense, at least for now, rests on good planning, risk identification and mitigation in time. Unfortunately it is probably impossible to plan for everything that well and eliminate all risks but good anticipation, analysis and management can bring risks to an acceptable level and limit their (expensive or even fatal) consequences.

Continuing research on business risk we wanted to learn more about real disruptions that managed to avoid all traps set by risk managers in the past 18 months (January ’15 to June ’16) – successfully causing problems and damage in companies. For this purpose we created a survey and asked participants to mark up to three disruptions that troubled them most during that period, either from the supplied list or by inserting new item according to own experience. A disruption-free option was also available.

Sample geographical distribution

Sample industry distribution

Survey was bilingual (English and the mostly spoken Western Balkan language) and administered via LinkedIn. We received 63 answers, most of them from Balkan countries, EU and South Africa. Service industry (professional services), retail and wholesale, and financial institutions were represented the most.

The results revealed that the large majority of businesses (84%) experienced at least one disruption during the 18-month period however many of them struggled with two or more different challenges. Most often it was lack of current funds to fulfill financial obligations (32% of all respondents) followed by inability to sell goods/services at a cost+ price (commercial disruption experienced by 30% of respondents) and project delays and/or budget overruns (25%). Between 16% and 13% of respondents also experienced additional trouble with IT (software and hardware, data, operators and users), corruption, non-compliance with current laws, regulation, standards, procedures and contractual obligations, or in operations (malfunction of any resource which is essential for running critical operating activities).

Business disruption rate of appearance

For three most represented regions in the survey the following conclusions come forth:

  1. Three most often disruptions in the Western Balkans were financial, commercial and project which coincide with top three in the overall answer but here at even rate of appearance of 27%. They are closely followed by IT disruptions (23%) and then operations (18%) and corruption (14%).
  2. Financial disruptions dominated in the EU countries (33%) followed by non-compliance and commercial – both at 27%. Corruption and IT came at 20% each.
  3. South Africa appears to be the riskiest country to run a business according to this survey. Every second firm experienced both commercial (55%) and financial (45%) disruptions. On the top of it they had to deal with corruption, project failures and currency exchange losses at 27% appearance each.

Mostly represented industry in my survey was professional services which contributed 32% to all responses. They were troubled by commercial disruptions (35%), followed by financial (25%) and a group at 20% each: projects, non-compliance and currency disruptions.

Retail and wholesale firms were often hit by both commercial and financial disruptions at a high rate of 43% each. Although every second business in this industry already had to deal with those two disruptions, competition from grey economy and project disruption made life even harder with additional 29% occurrence each. It appears that running a retail or wholesale business attracts more trouble than in other industries.

It looks to me that global business environment turned nastier. Based on past 18 months almost every business can expect at least one disruption in a coming year. Therefore it is imperative for managers and entrepreneurs to prepare for that situation adequately and on time.

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One response to this post.

  1. A very interesting and informative set of data which illustrates the limitations of risk identification and risk controls. In pursuing prospects that deliver the purpose of the organisation it is inevitable that we must take risk which is ideally minimised via management controls. There will always be residual risk which will manifest in undesired events which must be mitigated through tried and tested contingency arrangements. MSS 1000:2014 has a whole section dedicated to managing contingency arrangements. http://www.thecqi.org/Community/Special-Interest-Groups-SIGs/Integrated-Management-Group/Research-and-reports/

    Reply

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