Addressing the Impact & Challenges of BREXIT

The UK Government triggered Article 50 on the 29th March 2017. The process for departing the European Union has commenced. The vast majority of companies, both international and UK registered, conducting cross border trade will be preparing for how to best mitigate risk.

How should they react and protect themselves and retain competitive advantage?

APS does not envisage many entities escaping the uncertainty and confusion from the negotiations between the UK Government and the European Union. This exposure is likely to impact in one of 3 ways:

• Organisations find themselves potentially able to secure an opportunity from Brexit
• Organisations find themselves exposed to the overall net cost of Brexit
• Organisations find themselves exposed to both and must prepare for a balanced portfolio of initiatives requiring quick and informed decision making to preserve or increase shareholder value

POTENTIAL CHALLENGES IDENTIFIED FROM BREXIT

• Building regulatory resilience
• Reshaping risk governance models
• Building early warning foresight modelling to react instantaneously to negotiation outcomes
• Focus on protecting products, services and resources while seeking insight arbitrage
• Organisations will need to be agile and responsive to ensure the future nature of their business adapts to the new environment and all opportunities are fully explored
• Perform a root and branch review of their business models to identify how agile they are in decision making and executing change at pace
• The immediate impacts of Brexit are taking effect, but the long-term repercussions are still unknown, the question now is how to redress the consequences of taking the wrong path and missing the opportunities that will arise from Brexit
• Organisations should turn to mobilising workforces to embrace dynamism, simplicity and collaboration  – key capabilities that will place organisations on ‘war footing’, enabling them to execute mandates for change at pace with rigour and resolve (Not complex change programmes)

BEING READY FOR BREXIT

• Ensure ‘Executive Alignment’ and agreement to focus and prioritise decisions in order to build commercial resilience whilst exploring options to reinvent and adapt in line with a new appetite for risk
• Develop an early warning capability to model the ‘Cost of Brexit’ to ensure all opportunities and risks are instantly monetised so that executive teams can rapidly determine where investment priorities lie and where scarce resources should be focused
• Create a ‘single language’, a new and complete realignment of the way the organisation values and prioritise both commercial opportunity and risk
• Build ‘commercial capability’ across budget holders with a behavioural framework that is underpinned by the principles of rapid and dynamic decision making wholly aligned to the new executive priorities

EXECUTIVE ALIGNMENT

• The risk landscape ahead is out of the ordinary for Boards and It is imperative to revisit corporate risk appetite. It is likely that Boards will need to take risk to mitigate risk. The risk threshold may need to be increased to allow the executive teams the ability to secure and extract value from Brexit opportunities ahead
• Organisations able to react briskly will thrive in a Brexit environment, because they constantly push creativity and empower teams to secure competitive advantage using data driven foresight
• Understanding Executive positions on key strategic areas will quickly pinpoint where the team is fully aligned, somewhat aligned and totally misaligned. Conflicting directorates should be encouraged to collaborate as co-sponsors for change mandates to assist with building alignment

MODELLING THE ‘COST OF BREXIT’

• Executive teams require rapid line of sight to organisation-wide financial impacts, which should be apportioned to business scenarios and appraised against the business plan. To ensure that wider impacts are understood with no blind spots. If these impacts have been valued against the future cash flows and market share price, then executives are equipped to prioritise value and optimise scarce resources
• The scale of shareholder value at risk is exceptional. With Brexit underway, executives require a strategic cutting edge that gives them the necessary early warning system and commercial insights to build resilience, adapt or redefine their organisation in order to preserve or enhance shareholder value

SINGLE LANGUAGE

• Brexit will create unprecedented uncertainty and a necessity to translate insight as it’s released during negotiations. Insight and foresight will be crucial and the environment in which it is made available will be dynamic, whether intentional or unintentional, requiring rapid interpretation, valuation and impact to the business model

BUILD COMMERCIAL CAPABILITY

• In a post- Brexit era, establishing an environment of self-evaluation, self-regulation and innovative alignment will enable those organisations to prosper. Allocating scarce resource and executing rapid large scale change will reward those organisations that have embraced Brexit and see this as a period of opportunity to gain competitive advantage and secure their organisations future under a post Brexit UK

HOW CAN APS HELP?

• Support your organisation through the Executive Alignment process
• Assist with identifying opportunities, risks and managing those across your organisation
• Review of current strategic direction and regulatory deliveries with focus and alignment to Brexit
• Any movement of operations outside of the UK managed and delivered in line with organisational requirements