@Risk

A new paper from the Confederation of British Industry (CBI) predicts a new era of business to emerge from the recession. Companies will have a more cautious approach, and are likely to operate in a more collaborative and flexible manner, the CBI says.

Specifically, the report , titled “The Shape of Business – The Next 10 Years,” details key areas where UK companies are likely to re-think what was “business- as- usual” before the global economic tailspin. These four areas are:

• Businesses do not see credit terms falling back to pre-recession levels. Consequently, firms will look to alternatives to debt-driven growth in order to protect investment and innovation. More financing options will be created and deployed.

• Companies will reorganize and re-examine their approach to working with partners, such as suppliers, universities, and even competitors. Ongoing concerns over a ‘domino effect’ of supply chain failures and issues around trade credit insurance will compel firms to forge more collaborative supplier relationships.

• Sustainability and ethics will become more integrated into the business model. Firms will seek to improve accountability and corporate citizenship further to attract and retain customers and staff.

• A more flexible workforce will evolve, assisted by developments in technology and training, and building on the spirit of collaboration between employers and staff which has grown over the recession. For some firms that might mean a smaller core workforce and a larger ‘flexiforce’.

These findings are supported by a new survey conducted by Ipsos MORI in October and November and sponsored by the CBI and business advisory firm Deloitte. In the poll:

• Over half (55 percent) of the respondents said that they will now tolerate only a lower level of risk. Of these, 70 percent said an economic recovery would not reverse their position.

• Two thirds (68 percent) expect no improvement in credit availability in 2010 and are reshaping their business financing. 50 percent said they would use less bank debt, 44 percent said they would rely more on equity finance, and 26 percent said they would make more use of bond issuance.

• Only 24 percent said that they are not concerned about supply chain fragility during the recovery, and the majority (68 percent) of firms said they would be strengthening the level of partnerships with suppliers in the coming years.

• Interestingly, the top supplier risk concerns reported were: a unique, specialist supplier closing shop, the supplier’s own supply chain collapsing, and that the supplier would be unable to obtain working capital.

More results from the survey “Recession as a Catalyst for Change” are available here.