Financial risks top list in Poland where risk management standards are set for uplift

“In Poland, many clients expect suppliers to give them extended lines of credit, every transaction is an occasion to negotiate how to extend the payment period,” he stressed.

Late payment is typical in Polish business transactions, he added, but the financial crisis has aggravated the situation. “One of our risk management measures is to try to reorganise our sales processes by separating clients into various categories,” he said. “We feel safer with clients that pay on time and do not expect us to negotiate each delivery separately.”

His company also has to deal with currency risk, particularly in relation to property insurance claims.

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The company is insured under a global insurance programme underwritten by its British parent. As a result, the insurer settles in Sterling, even if the claim emanates from within Poland and has occurred in Zoty. “The amount that can be covered by the company itself may seem minimal for our British colleagues, but for us, it is substantial because there is a gap in the cover,” he said.

Tomasz Miazek, Volvo’s insurance manager for central and eastern Europe, has observed another development in the Polish corporate insurance market. “The importance of risk management is growing,” he said. “For a long time we had a soft insurance market and insurance buyers tried to negotiate lower prices each time instead of implementing risk management measures. Companies preferred to change their broker in order to find a cheaper insurance policy rather than taking risk management actions.”

This is about to change, Mr Miazek said, particularly given the fact that the Polish insurance market leader PZU is demanding such action. “When the market leader demands special control systems, other insurers will follow suit,” he said.

Some industries in Poland have a greater need for risk management than others because of losses in the past that have led to problems when placing insurance cover, he continued. “Furniture companies in particular have difficulties finding cover,” he said.

Hard to come by insurance cover can cripple Polish companies. “If companies depend on bank loans and cannot get property insurance this becomes a matter of life and death, as banks only grant loans secured by insured property,” Mr Miazek gave as an example.