VIEW: Brexit through the risk management lens

Amid all the Brexit noise that has dominated the news for months – no, years – it is all too easy to lose sight of why and how Britain got to this point in the first place. Why, on 23rd June 2016, did the UK choose to leave the European Union? The answer matters because it tell us something profound about political risk.

It is very easy to blame the Brexit referendum result on a widespread mistrust of the EU. It is true that Britain has always been uncomfortable with its position in Europe – be it the lack of control over laws and borders or the costly and bureaucratic nature of the system. But this is only part of the story.

There has been a growing disconnect between the ruling and business classes and the mass population for years. Not all communities felt the benefits of the boom years of the eighties and nineties, and when the financial crisis struck in 2008 and large banks and other high profile financial services – which many blamed for causing the crisis – were bailed out by politicians, it created a lot of anger.

This left an environment that was ripe for populism; one where anti-immigrant and anti-EU sentiment was easy to play on. According to the 2019 Edelman Trust Barometer, six in 10 Britons believe the government doesn’t listen to “people like them”. So for many, Brexit represented a chance to voice political discontent: it was a promise of change.
But the main point is that Brexit did not emerge out of nowhere; the causes had been simmering for years, if not decades. And yet almost no-one in the business community saw Brexit coming.

As risk professionals, we talk about horizon scanning; we must ensure this isn’t just focused purely on specific risks, but also broader social movements.

Enterprise risk management means being aware of the interplay between different forces and how they might impact upon your organisation, and to that end Brexit has sobering lessons. We all have a responsibility to ensure we have a finger on the pulse of the social and political sentiment of the environments in which our organisations operate.

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