The impacts of a Greek default could be felt across Europe and could generate real business continuity risks. David Honour offers a checklist of questions which organizations can consider when making contingency plans.
While on the surface a Greek default on its IMF debt repayment, due by 30th June, may look like a pure political risk; in reality it could generate real business continuity risks for European businesses. The impacts to Greece-based organizations will, of course, be much greater; but all European companies have potential exposure due to two main areas: supply chain dependencies; and the wider societal impacts of a default.
The conundrum for European business is what contingency plans can be put in place to protect against the possible impacts? The following sets of questions offer some food for thought:
Greece-based organizations
It has been suggested by various experts that a Greek default may result in an immediate closure of banking facilities in the country, to prevent a panic-driven run on the banks. This would have rapid knock-on impacts, with businesses being unable to process non-cash payments and to access funds.
Organizations need to consider the following:
- How long could banking facilities be unavailable?
- What measures can be used to convert more sales to cash-only, and what needs to be done to protect and handle the cash generated?
- What amount of bank funds could be liquefied or could be converted into other types of investments?
- What temporary changes can be made to the way that staff wages are paid should electronic payments not be possible? What can you do to support staff who are experiencing hardship?
- What can be done to ascertain how exposed critical suppliers are?
- Will critical suppliers change (extend or reduce) their payment terms in response to temporary difficulties your organization might have in paying them?
- What impact could the knock-on impacts of a default have on critical infrastructure? Do you need to increase your stocks of fuel for temporary power generation or to guard against fuel shortage? What contingency plans can you make for long-lasting disruption to communications, water supply, or air and ferry transportation, for example?
- There is a risk that there could be societal disruption, with resulting damage to buildings and infrastructure due to protests, looting or direct attack. What measures can you take to protect your buildings and assets?
- What crisis communications messages can you prepare in advance to ensure that customers, stakeholders and suppliers maintain confidence in your organization?
Non-Greece based organizations
The main exposure for Non-Greece based organizations comes from the supply chain but there is a risk that anti-EU and anti-capitalist feeling will be fuelled by the pressure that has been put on Greece and the impacts on ordinary Greek citizens, and pensioners in particular, since calls to reduce pension rights has been one of the central sticking points in discussions. This could result in widespread protests. Another exposure that non-Greece based organizations have is employees who could become stranded in the country should air and ferry networks close due to lack of funds, critical infrastructure problems or fuel shortages.
Organizations need to consider the following:
- How exposed is your organization to Greece-based suppliers? How quickly could you find alternative suppliers should this become necessary? What pre-agreements can you make with alternative suppliers to ensure that your organizations gets priority should demand suddenly increase?
- How exposed could your organization be to potential societal disruptions? Are there any additional measures you need to take to protect buildings, infrastructure and employees?
- Do you know the travel plans of employees? If not, what can you do to identify employees who may be in Greece in the run up to and after 30th June? What advice can you give such employees and should you make any contingency plans to assist these employees should they become stranded in the country?
The above is just a quick brainstorm of questions that could be asked. If your organization has contingency plans you are willing to share, or if you have more questions to add to the above lists, please email editor@continuitycentral.com so that they can be added to this page.
