War in Ukraine threatens all economies, warn risk managers

Russia’s invasion of Ukraine is threatening stability across Europe and could impact businesses of all sorts and sizes, warned a group of Belgian risk managers speaking to Liz Booth as part of our Risk Frontiers Europe 2022 survey. The war in Ukraine is understandably front and centre of everyone’s mind at the moment, not least for the human suffering. It will also have a big impact on business in the year ahead. A group of Belgian risk managers taking part in our Risk Frontier Europe 2022 survey are worried as the war in Ukraine shows no signs of stopping. For Nathalie Vandenbroucke, insurance, risk and compliance manager at Eiffage in Benelux, the crisis has bought political risk a little closer to home. “We have sub-contractor teams in Poland who have stopped work. They were from Ukraine and have chosen to go home to help their families or even to fight,” she said. And for Marie-France Theys, corporate risk and insurance manager at Schneider Electric, the threat is closer still. “We have a distribution centre in Ukraine and about 150 employees who are facing incredible difficulties to move out or to stay in their country and support the needs of their families.” She has had little direct involvement in the response because Schneider set up a crisis management team with business continuity planning and logistics experts to manage the rapidly evolving situation. Decisions about whether or not to close a centre, or what will happen next, are being managed by that team and senior management, Theys said. Russia is a major country for Schneider and again, the decisions will be taken at that higher level, Theys added. KNOCK-ON EFFECTS The group of risk managers agreed that whether or not they have direct links to the conflict, there will be repercussions for all businesses. Bart Smets, head of insurance and risk at Umicore, said: “The main risk for this year is supply chain, whether or not it’s related to the Ukraine situation.” He added that the greatest problem is the lack of visibility on what supply chain risk might look like in even a few weeks’ time. Smets warned that the procurement of raw materials is likely to slow down even further in the coming weeks – something that started with Covid-19. Vandenbroucke noted that the risks ahead go far beyond the Ukraine crisis, citing issues like ESG and CSR that need to be maintained, whatever the situation facing business. For example, Smets said Umicore has a total no-tolerance policy towards child labour. It is actively working to ensure that there is no risk of child labour involvement throughout its supply chain. Frédéric Lycops, corporate risk and insurance manager at Recticel, said his firm has strict guidelines and rules on ESG matters when dealing with suppliers. CYBER THREAT For Yves Brants, risk manager at NRB, the situation is a little different. As the risk manager at an IT company, the greatest risk is a cyberattack. “Our main risk is about cybercriminality as a result of the conflict [in Ukraine],” he said. It is an issue that has been raised by several European governments. Belgium is at particular risk because it is also home to the European Union, NATO and other global organisations that might be a target for Russia, explained Brants. He said his company is facing the risk of cyberattacks every day, but this is not his only concern. “We do have supply chain issues because it has become hard to obtain various electrical components – many of them come from China and that market has yet to fully recover from Covid-19, so is not back up to full steam,” he said. TIME TO ADAPT It is difficult to mitigate supply chain issues but it can be done, said Theys. “We are fortunate because we operate in more than 100 countries. We are able to balance our risks between various countries, when one is up, another might be down, but overall we find a balance on a global level. Our supply chain has proved its resiliency,” she said. “The ability to adapt is key. We need to be ready to adapt to changing geopolitics or economics and that has been one of the strengths of our company in finding alternative solutions when things get tough. We have changed a lot to make sure we can cope,” she added. By way of example, Theys said her company has set up mirror factories, so if one has to close for any reason, the other can carry on and production does not stop. “It is a little like the data centres that many firms established after 9/11 to ensure they could carry on if their main office was hit,” she explained. “I think resilience is key.” The group of risk managers all acknowledged they will be facing challenges when it comes to rising costs and inflation. Belgium has long been relatively dependent on Russia for its gas supplies, and even before the Ukraine war was seeing big price rises. “Look at gas prices, they have risen by a factor of 30 in a year. It is not only a risk for individuals but it is an emerging risk for us as a company, particularly for those involved in manufacturing. Rising energy prices will have a huge impact for us all,” said Smets. “I don’t think we will be able to pass all these increases onto our customers and it could put certain businesses at risk,” added Lycops. The group expects to see some business close as a consequence in the coming months, which is yet another risk to factor into their plans.

War in Ukraine threatens all economies, warn risk managers

Want to read this article?

Read Next

Partnership is key as Allianz Commercial plays its role in ESG and PPPs

Insurance market hardening to moderate further at year-end

Ferma’s president says pan-European vehicle for systemic risks not dead

Marsh urges buyers to prepare for net-zero underwriting

Hardening reinsurance market set to prolong primary buyers’ pain

Partnership is key as Allianz Commercial plays its role in ESG and PPPs

Insurance market hardening to moderate further at year-end

Ferma’s president says pan-European vehicle for systemic risks not dead

Marsh urges buyers to prepare for net-zero underwriting

Hardening reinsurance market set to prolong primary buyers’ pain

Want to read this article?

Read Next

Partnership is key as Allianz Commercial plays its role in ESG and PPPs

Insurance market hardening to moderate further at year-end

Ferma’s president says pan-European vehicle for systemic risks not dead

Marsh urges buyers to prepare for net-zero underwriting

Hardening reinsurance market set to prolong primary buyers’ pain

Related Articles