Busi­ness re­silience

Business First - - NEWS -

Re­ports show that con­fi­dence is down, how­ever for some Aus­tralian busi­nesses, post elec­tion gov­ern­ments – along with their poli­cies – will come and go. It is those that have taken an ap­proach of re­silience and look be­yond the elec­tion cy­cle that have their busi­ness strate­gies in­tact.

Typ­i­cally elec­tions cy­cles and the pe­riod post-elec­tions are marked by poor mar­ket per­for­mance and con­sumer con­fi­dence, “Un­cer­tainty cre­ated by the elec­tion has cer­tainly not helped sup­port busi­ness ac­tion and this is prob­a­bly not go­ing to be ad­dressed im­me­di­ately af­ter,” com­mented Ru­pert Pos­ner, CEO for Good En­vi­ron­men­tal Choice Aus­tralia and Ad­vi­sory Board mem­ber for Aus­tralian Sus­tain­abil­ity Con­fer­ence.

Many busi­nesses within the sus­tain­abil­ity sec­tor have seen both strate­gic and fi­nan­cial ben­e­fits of an ap­proach of re­silience that not only suc­cess­fully nav­i­gates dis­rup­tions, such as elec­tion cy­cles, but can also cre­ate longterm value.

High­light­ing the im­por­tance of this ap­proach is a re­cent study show­ing that: 1. Over 90% of busi­nesses were com­mit­ting to sus­tain­abil­ity and en­vi­ron­men­tal poli­cies and the same num­ber had a ded­i­cated en­v­i­ron- For more than two years from late-2010, the Aus­tralian dol­lar was usu­ally val­ued above the US dol­lar. This cre­ated un­prece­dented value for lo­cal im­porters and squeezed the mar­gins of ex­porters, par­tic­u­larly man­u­fac­tur­ers and farm­ers.

How­ever, the Aus­tralian dol­lar dipped back be­low par­ity with the green­back in May this year and has re­cently hov­ered on ei­ther side of the 90-cent mark.

This has re­versed the con­di­tions. Many small busi­nesses that trade in im­ported goods are now feel­ing the pinch thanks to re­duced men­tal team. 2. The num­ber of or­gan­i­sa­tions that had com­pleted energy ef­fi­ciency and re­duc­tion plans to make their busi­ness more re­silience and prof­itable was over 80%

“From the dis­cus­sions that we have with busi­nesses within the sec­tor, there is no doubt that if com­pa­nies fully un­der­stand and ad­dress cash flows. On the other side of the de­pre­ci­at­ing Aus­tralian coin, ex­port con­di­tions are much more favourable.

Risks to im­porters

De­spite the tighter cash flows, Mr. John Phillips, Vero’s chief un­der­writ­ing & port­fo­lio man­ager – com­mer­cial, has urged im­porters to re­sist the temp­ta­tion to re­duce their in­sur­ance cov­er­age.

“Un­for­tu­nately, in­sur­ance is of­ten a low pri­or­ity for small busi­nesses, even at the best of times. How­ever, the mi­nor sav­ings you will make by re­duc­ing your cov­er­age will be heav­ily out­weighed by the po­ten­tial losses af­ter an sus­tain­abil­ity is­sues from a long-term per­spec­tive they will en­joy eco­nomic and busi­ness ben­e­fits ir­re­spec­tive of the va­garies of elec­tions and gov­ern­ment poli­cies,” said Pos­ner.

“This is, of course, not to di­min­ish the im­por­tance of well thought out gov­ern­ment pol­icy and work­ing with both sides of gov­ern­ment to see busi­ness ac­tion sup­ported.” For ex­porters, the cur­rent con­di­tions will en­cour­age an in­crease in ex­port ac­tiv­ity. Some small busi­nesses may even take the op­por­tu­nity to en­ter ex­port mar­kets for the first time.

Im­por­tantly though, as soon a busi­ness be­gins to ex­port over­seas, it be­comes ex­posed to new risks.

“Most busi­nesses will have prod­uct li­a­bil­ity in­sur­ance in place to cover them­selves from any loss, dam­age or in­juries caused by their prod­uct. How­ever, many prod­uct li­a­bil­ity poli­cies only cover do­mes­tic sales, not over­seas ex­ports,” said Mr. Phillips.

“Once you ex­port your prod­ucts over­seas, par­tic­u­larly to mar­kets like the USA, you have to ex­tend your in­sur­ance to cover your new risk ex­po­sures.”

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