London companies lost £16bn in 2015 due to risks within their control – KPMG Enterprise
Businesses in London lost around £16bn last year due to risks within their control, according to new research out today.
Firms suffered particularly from an over-reliance on a small number of suppliers and customers, which left them vulnerable to "costly fractures in their supply chain and a loss of vital revenues", according to KPMG Enterprise.
The firm surveyed 222 chiefs of mid-sized businesses – companies with a turnover between £10m and £500m – and asked them how they deal with risks relating to their workforce, customer base, supply chain, data security, regulation and tax compliance.
KPMG found that 41 per cent of company leaders were concerned about being over-reliant on a small group of suppliers, leaving them at greater exposure to price increases, changes in commodity prices and quality control issues.
And despite half of the survey's respondents saying that the threat of losing major customer accounts was their most pressing day-to-day concern, over a quarter (29 per cent) admitted that they rely on their top five customers for more than half of their turnover.
“Whether related to customers, suppliers, data security or regulation, never has the adage ‘fail to prepare, prepare to fail’ rung more true – and the financial impact that this lack of preparation is having on business is startling," said KPMG Enterprise London partner Ben McDonald.
"Relying on a small pool of suppliers is a particularly common vulnerability amongst middle market companies, yet we’ve seen many high-profile examples of organisations that have taken a substantial financial hit as a result of a fracture in their supply chain. And these fractures aren’t solely caused by suppliers going bust.
"Ethical lapses such as poor working conditions, data security breaches, substandard production, a flouting of environmental regulations or irregular financial transactions can all translate into significant reputational – and ultimately financial – damage to the contracting business.”