Brexit contingency planning may increase risk exposure
Critical information, analytics and solution providers, IHS Markit has reported that UK manufacturers are stockpiling raw materials ahead of the UK's scheduled departure from the EU.
Critical information, analytics and solution providers, IHS Markit has reported that UK manufacturers are stockpiling raw materials ahead of the UK's scheduled departure from the EU. The rush to hoard raw materials, components and finished goods as the Brexit deadline approaches marks the highest level of stockpiling activity since comparable records began in 2007, highlighting the unique risks posed to the British economy by a disorderly Brexit.
Concerns over the flow of goods, the potential for a significant fall in the pound and tariffs being imposed on products from the EU mean importers are actioning their Brexit contingency plans to weather a possible Brexit storm. UK exporters could also find themselves affected by Brexit related disruption, with goods intended for shipment to the EU also piling up this side of the border.
This activity signposts a number of possible risk exposures for UK businesses.
Any business that is stockpiling needs to consider the adequacy of their sums insured. Also increased inventories may require additional premises or storage facilities, so insurers will need to be made aware of these changes and how the overall risk is affected.
Increased storage may also impact on risk management:
- From a fire risk perspective, lack of space may result in stock being stored too close to sprinkler heads, or located closer to electrical equipment, or heaters.
- From a theft risk perspective, more stock could mean that more theft attractive items on site means greater temptation for thieves.
- From a Liability risk perspective reduced space, due to stockpiling, might present health and safety issues, such as slips and trips or falling items of stock if stored inappropriately.
Some sectors, for example motor manufacturing, are also considering shutdowns after Brexit amid fears over parts shortages. This would increase those risks normally associated with unoccupied properties, such as malicious fires or damage, security and burst pipes and could have a domino effect on their just-in-time suppliers.
If your business is considering actioning your Brexit contingency plans please speak to your usual Franklands adviser on 01332 545720.