As the ongoing Iran conflict continues to weigh heavily on the economic outlook, the latest research from SCALA warns that many UK businesses may be financially underprepared to withstand disruption.
SCALA’s latest report, The Resilience Gap: Assessing the Risks and Readiness of Global Supply Chains, found that over half (52%) of UK businesses have only partly commenced strategies to avoid financial losses from supply chain disruption, while 14% have no strategies in place to mitigate serious financial impact.
“Every supply chain disruption, be it a minor transport issue or a full-blown cyberattack, is also a financial event. When goods cannot move, systems cannot process orders, or a key customer stops operating, the impact can quickly move from the warehouse or transport network into the accounts,” says Chris Clowes, executive director at SCALA. “Businesses are aware of the risks facing them, but too many are still only part-way through the work needed to protect revenue, cash flow, and service levels when disruption happens. Businesses should be stress-testing the financial impact of different disruption scenarios now. That means understanding where revenue is concentrated, where systems are fragile, which customers or products carry disproportionate risk, and what contingency options are commercially viable before the next shock arrives.”
Key takeaways:
· The survey found that nearly half (47%) of businesses generate more than half of their sales from their Top 3 customers, creating a significant revenue risk if disruption affects service levels or damages major customer relationships.
· The report also revealed that 57% of businesses could not continue sales order processing or purchasing if their main system failed, while 52.4% say they are poorly prepared for war or political issues.
· The findings suggest that many organizations remain exposed not only to operational disruption, but to the financial consequences that follow. A production delay, transport interruption, system outage or geopolitical shock can quickly feed through into lost sales, higher costs, cashflow pressure and weakened customer confidence.
