There are two levels at which risk managers should be considering Brexit, according to Airmic member Jonathan Blackhurst, director, head of risk management at business services firm Capita plc.
The first level concerns Brexit "as a single event". In other words, how the UK's departure from the EU will impact an organisation's operating environment. Will they be exposed to disruption in the event of a no deal scenario? How will restrictions to freedom of movement impact them? Is their supply chain vulnerable to delays?
These are the sort of questions risks managers will have been addressing since the referendum was held in 2016. "By and large, I think the risk community is pretty prepared on this front," observes Mr Blackhurst. "Ask any risk manager what their Brexit exposures are, and they can tell you the headline risks and what plans they have in place to mitigate them."
The second level, however, is perhaps more challenging - and certainly more nebulous. It concerns the broader impact Brexit will have on an organisation, including the big questions of societal, economic and political change.
"Brexit is not an isolated event," Mr Blackhurst explains. "We need to think about and understand what caused Brexit, why it's here and how it's implicating the future in the broadest sense. Brexit is in many ways the embodiment of political, social and regulatory instability and it will cause a lot more disruption than will be immediately evident the day after we leave the EU."
The risk profession, and businesses as a whole, are not doing enough to consider Brexit in this wider context, he believes. "I think the risk profession can be accused of navel gazing a bit in this sense - there's been too much focus on Brexit and day one after we leave. There will be bigger consequences such as potential protectionism and social trends which have political implications."
Brexit is a trigger for massive change
For Capita, Brexit is a "managed risk", says Mr Blackhurst. They have created a leadership group overseen by the board risk committee to understand their Brexit-related risks. One of the first lessons they learned, is that any Brexit taskforce needs authority. "It started off too low down and too administrative and the decisions being made weren't followed through, so we created a working party with more teeth. It has three layers of seniority, starting at the board."
Its biggest "headline" risk is talent and staff welfare, says Mr Blackhurst. The company employs 70,000 people in the UK to supply its services, many of which are EU workers. "We have publicly recognised our concern about the uncertainty Brexit will bring to this demographic," Mr Blackhurst explains.
However, he acknowledges that addressing the broader impact of Brexit - elevating the discussion to the second level - has been more challenging. "I don't think we've done enough to address the bigger picture. For example, a key risk for Capita is really a deteriorating economy which will put pressure on the demands for our services. Is this a Brexit risk? Not in the sense that it will impact us on the day we leave, but it's something we have to consider in the context of Brexit."
Planning for Brexit on this level requires a different toolset and a different way of thinking, he believes. "Brexit is an event but it's also a trigger for massive change. Is this change that we can apply tried-and-tested change management techniques to, or does it change the playing field and require a new approach? I think it's the latter.
"It's worth challenging the business on this question. At Capita for example, a large part of our business relates to government contracts, so the impact Brexit will have on government relations is key."
Identifying where Brexit begins and ends is an almost impossible task. The subject has become - or indeed has always been - about far more than Britain's legal relationship with its neighbours in Europe. This, for Mr Blackhurst, is the challenge. "Brexit is a subject that can snowball. We need to embrace that as a risk community. We are guilty of narrowing its focus."
This article was first published as part of the Airmic-FERMA Brexit newsletter. For more Brexit insights, click here.