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Three Degrees of Transformation 

Transcript:

I have been supporting corporates prepare for a breakup of the Eurozone since Summer 2011 and I am surprised at the number who have still done very little or no planning in this area. In the Business Leaders Survey we saw 36% of CEOs doing nothing.

 

It is our view that companies with material exposures to the Eurozone should understand their risks and have contingency plans in place or have taken defensive actions.

 

To help identify where a company’s material exposure is, we suggest looking six dimensions.  These are: Cash, Contracts, Controls, Continuity, Counterparties, and Commercials.

 

Cash is clearly understanding the risk areas in daily banking operations but also looking at cash receivables and trapped cash outside of pooling arrangements.

Contracts is reviewing contract clauses but also considering your negotiation strategy.

 

Under controls, we consider the impact of fraud and error and also a governance and monitoring structure for Eurozone risks.

 

For continuity we are suggesting people refresh continuity plans, review communication plans and increase monitoring of at risk suppliers and customers.

In some respects, work on continuity planning is wasted if counterparties are not considered, our fifth C.

 

Finally commercials – we are already seeing changes in sales and markets and this is not likely to cease on a breakup of the Eurozone.

 

As a final thought, whatever the outcome, the world in which we live and work is changing. Those corporates considering the longer term structural issues first are likely to be those with a competitive advantage in the future.

KPMG Director Jane Hurst talks through some of the key considerations companies must make in the wake of the eurozone crisis.
 

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