But businesses confident in their ability to deal with the problems
The potential for a global double dip recession and its impact on trade in Europe, top the list of risks facing businesses according to a poll.
The survey of over 100 European business leaders, by the Economist Intelligence Unit (EIU) and co-sponsored byinsurance specialist ACE, revealed nearly 30% see a fall back into recession as the biggest potential risk facing the global economy in the second half of 2010.
Other risks facing the global economy cited in the survey included sovereign debt default (19%), market volatility (9%) and a future banking crisis (9%). However, fears of a break-up of the Eurozone, prompted by the recent meltdown of the Greek economy, appear to have abated with only 5% of respondents considering it a risk going forward.
The impact of another global financial crash on European businesses could lead to weakened demand for goods and services and the ability of firms to raise capital, according to respondents, who saw these as the two main risk challenges facing businesses over the remainder of 2010. Concerns were also expressed about both market and financial volatility.
The respondents were also asked about how prepared their businesses were to deal with risks. Confidence in their businesses’ abilities to deal with these kinds of risks was very high with 90% expressing the view that their firms would navigate the recession successfully.
Andrew Kendrick, chairman and chief executive officer of ACE European Group, said: “Regardless of whether we face a further global recession or not, the results of this survey show that firms remain vigilant to the risks they face. At a time of economic downturn when risks are heightened, insurance has a pivotal role to play. Insurers and risk managers need to work together to ensure the transfer of these risks from business balance sheets is achieved in the most efficient and effective way.
“Recession also creates the potential for new or emerging risks to evolve. Therefore, it is vital that insurers continue to offer creative and relevant products addressing the needs of buyers to demonstrate the importance of the insurance proposition in difficult economic times.”