What are the risks of Brexit without a deal?

Why is the PM still trying to get a deal?

I have written many times about the risks of Brexit, and I keep writing, because the risks are evolving, or at least my understanding of their probability and severity is. I am increasingly concerned that many brexiters underestimate the potential harm that a hard Brexit would cause. Apparently many EU leaders underestimate the harm a no-deal Brexit would do to the rest of the EU too.  Any deal, no matter how poor, would enable the transitional arrangements to operate, and some arrangements would surely be made for such things as:

  • aviation
  • educational and business travel
  • law-enforcement and intelligence

In a no-deal Brexit, even the arrangements already negotiated  would no longer stand.

Dice: deal or no deal, Brexit is a gamble - we all need to manage the risks.
Dice: deal or no deal, Brexit is a gamble – we all need to manage the risks.
Those who want no deal ignore the importance of goodwill

When we cross the deadline, we are bound to find things nobody has resolved. In the event of a deal, even a bad one, we can hope that common sense and  goodwill would enable both sides to find ways around the difficulties, until they have made more permanent arrangements.

If there is no deal, it is likely that the atmosphere will be different.  It is bad now, but could improve if a deal is done. Each side will blame the other for the failure to reach agreement. We can rely on the British tabloids to pour petrol on the flames. It would then be likely that officials on both sides of the Channel, would take a pedantic approach to every situation that falls into a grey area. They could be anyone from police and customs officers to local and national civil servants.

The recent scallop wars show how easily things can go wrong. Perhaps we Britons will find out what a hostile environment is like, when we apply for visas. Think of the Windrush scandal in reverse.

Can those who want no deal do any more harm after Brexit?

Yes! It is possible they have another agenda that is hiding behind Brexit. Am I a conspiracy theorist? No. I usually follow the cock-up theory of history. Of course, that one applies to Brexit too. I will write about this conspiracy risk in another blog.

A cartoon man with a question mark. Is he pondering what the hard brexiters have in store?
A cartoon man with a question mark. Is he pondering what the hard brexiters have in store?

 

 

The risks of using algorithms for child-protection

Who is using algorithms for child-protection?

Several councils in England are using algorithms, which are using data from many sources, within the council and, in some cases, other agencies. This has caused controversy over privacy and misuse of data.

Why are they doing it?

People have designed these algorithms to identify children at risk of abuse. Some councils are using another algorithm to identify children whom criminal gangs are likely to try to recruit. The systems can look at more data in minutes than humans can in days. This will enable social workers to concentrate on high-risk cases with all the data they need to make sensible decisions.

What are the risks?
  • If councils put so much data together from diverse sources, a hacker could have a feast.
  • The data councils have tends to be about poorer families. There is a risk that they will not notice at-risk children in better-off families. [That is a risk at present. The use of algorithms doesn’t affect it].
  • There are questions of the legality and morality of using data for purposes different from those for which it was collected, although any data can be accessed in order to prevent or detect crime.
What are the two big risks?
  1. A council could take a child into care just because an algorithm said they should, perhaps wrongly stigmatising the parents.
  2. Social workers could become so reliant on the system that they ceased using their knowledge, training, experience or common sense.
Do those risks not outweigh the advantages?

Not necessarily.

  • The risk that exists at the moment is that a child can slip through the net due to lack of resources, human error or failure to bring together information held by different departments or other bodies. All too often, a child has died despite warning signs, because no one person saw all the signs. Sometimes, a doctor, a policeman and a teacher all had their suspicions, but knew nothing of each other’s concerns. Nobody told the social worker.
  • Some people rely on ticking boxes without thinking, even using manual systems. A human needs to interpret data, whether you are safeguarding children, investigating a crime or assessing an insurance claim. Used rightly, an algorithm should free social workers from repetitive tasks and allow them to think about the information produced.  People should take decisions. Not computers.
What’s this got to do with your business?

Most of us use statistics, and perhaps others should. We can mislead, or be misled, unless we learn how to use them properly. If you haven’t time to go on a course, try reading my little book, aimed at ordinary people, not mathematicians.

How to avoid being misled by statistics

 

 

 

 

Could you survive the risks of another financial crash?

Why am I writing about the next financial crash?

Gordon Brown has spoken, on the tenth anniversary of the 2008 financial crash, of his fears that another such event could happen sometime soon. Some say he was responsible for the downturn in the first place. I say Gordon Brown did not cause Lehman Brothers to go under. Even George Osborne commends Brown for his handling of the crisis when it occurred.

Why does he expect another crash?

Most governments have not learned the lessons of the last one, or not acted upon them, anyway.

  • Governments have still not regulated the banks closely enough
  • Many of the regulations don’t apply to other financial institutions
  • Some banks are still too big to be allowed to fail
  • Property prices still affect economies disproportionately

In addition, a lot of people are worried about the economic woes of Turkey: they could be contagious!

How will it compare with the last crash?

It would, in Gordon Brown’s opinion, be worse than the previous one for several reasons.

  • Governments can’t cut interest rates much more.
  • They won’t be able to throw such huge sums at the banks.
  • International cooperation is less likely, given the populist, nationalist politics of many countries.

I haven’t even mentioned the effects of Brexit!

So what’s that got to do with you?

Ask yourself a few questions.

  • Have you any plans for such a crash?
  • What did you do last time?
  • What did others in your industry do?
  • Did you learn any lessons?
Wouldn’t a crash be as bad for everyone?

No! Some people were better prepared than others last time. Some even saw and took opportunities.

  • People looked for more low-cost/low-quality products and services.
  • Investors desired cash more than equities, generally.
  • It was a good time to buy, if you could afford to wait it out.
Masks: happy and sad. Which will suit you if there's a crash?
Masks: happy and sad. Which will suit you if there’s a crash?

Have you a strategy for survival? Perhaps now is the time to produce one. Have a chat with me, if you want an independent opinion.

The risks of taking the “Check Your Heart Age” Questionnaire

How’s my heart?

I have just taken the Heart Age online test that you have probably heard of in the media. My result? Let’s just say I’m moving all my investments into short term. Or I would be if I trusted the results. If I had a dodgy heart, this test result could bring on a coronary!

What factors affect my heart age?

Three big things seem to have driven the results.

  1. An underlying condition, for which I am getting treatment
  2. My cholesterol level
  3. My blood pressure

The results included advice to act to reduce items 2 and 3. There was not a question asking how or even whether my condition is being treated.

Would action on items 2 and 3 help my heart?

The reason for the bad results is that in answer to the relevant questions, I clicked on ‘Don’t know’. I don’t, because I have never been told what the figures mean. Therefore, when I have a routine check-up, I just wait to be told if the figures are up or down and do whatever the doctor or nurse recommends. I am on tablets which keep my cholesterol down, and my blood pressure has always been OK or better. I just don’t know the numbers.

Why does ‘don’t know’ mean heart problems?

That is another thing I don’t know. I assume the system inserts an average result. That implies most people have too much cholesterol and high blood pressure. Or is it just the ones taking the test?

What would make my heart younger?

Better diet and more exercise are the main recommendations. They are things I am already working on. Of course, dietary advice is constantly changing, as is advice about alcohol consumption.  The only way to get a more useful picture of the health of your heart, or any other part of you, is to get a proper medical check-up and have a serious conversation with a doctor or other health professional.

Remember, stress is very bad for your heart.

Worrying about your health is bad for you. Don’t worry: just take sensible measures, based on sound medical advice. Also, try to reduce stress at work or in any area of life. A risk management consultation might help you get control of the risks in your business and so reduce some of the causes of stress. Have a word with me. There are various therapies which different people have found useful in managing stress, from massage to hypnosis. Try one.

Misused statistics can be bad for your heart.

The people who designed the questionnaire and those who interpret it could benefit from reading How to Avoid Being Misled by Statistics. So could you, perhaps?

How To Avoid Being Misled By Statistics by [Murray, John]

 

How can you manage the risks to your business of a hard Brexit?

Why am I talking about a hard Brexit?

I have written before about the risks of Brexit. I have always said that everything depended on the terms we got and I still say so. However, there is increasing talk of a hard or ‘no deal’ Brexit which cannot be ignored. Despite this, much of what I have written previously will still be relevant.

How to begin assessing the hard Brexit risks?

The risks of a hard Brexit need to be assessed in the same way as any other risks. First look at the probability, then the severity, before considering your control measures. Not that most of us can control the risk in terms of probability. If you can: please do! Most of those who voted Leave probably believed we would still be able to trade with the EU as it was in everyone’s interests. It was. It is. But…

What is the probability of a hard Brexit?

I cannot remember anything being so hard to assess. It makes weather forecasting look like an exact science. If nobody would benefit from a hard Brexit, apart from a few self-seeking politicians, why is it at all likely?

  • The progress of the negotiations so far does not make me optimistic.
  • There are so many things that could go wrong: in Westminster, in Brussels and in 27 other capitals.
  • The Russians could interfere covertly.

One problem most of us face is that of trying to tell reality from perception. How much of what we are told is a negotiating ploy by either side? Will the EU offer us a deal at the last minute, regardless of the rhetoric? Will the extremists in parliament act rationally when it comes to the crunch?

Happy and sad masks. Is the threat of a hard Brexit just a ploy?
Happy and sad masks. Is the threat of a hard Brexit just a ploy?
What about the severity of a hard Brexit?

Again, it is hard to know what is reality rather than scaremongering. However, in the absence of ANY agreement, there would be no guarantee that any contact with the EU could be maintained, at least in the short run.  You may argue that we can and do deal with countries outside the EU without much trouble. Yes. But we have treaties, agreements and other arrangements. In some cases, such as the USA,  there are visa requirements and travel restrictions. Some arrangements depend on our being in the EU.

How could a hard Brexit affect your business?
  1. You need to ask yourself what proportion of your sales goes to the EU. Then ask how realistic it would be to replace that with more sales in the UK or to non-EU countries.
  2. Next, you need to ask what supplies you obtain from the EU. How important are they? This is not necessarily all about volume or percentage. You might spend only a small percent of your costs on some component or ingredient, but it could be crucial to the running of the business. How easily could you replace it with something made in the UK or elsewhere outside the EU? Or change your processes so you can do without it?
  3. Then there’s the problem of a supply chain that crosses the Channel several times, as is common in the motor industry. Is yours like that? Does it have to be?
  4. How time-sensitive are your supplies or sales? How seriously would bureaucratic delays at ports affect them? Would better planning be the answer?
  5. Even if you think you are safe, check on the sources your suppliers depend on and ask what contingency plans they have.
  6. You also need to consider your dependency on EU workers. Again, how can you replace them from the British workforce or from elsewhere?
How hard would hard be for you?

I remember an episode of Only Fools and Horses, where Del got involved with a singer with a lisp. He couldn’t pronounce his R’s. After a catastrophic performance, everyone was expressing anger. The singer said, “I’ve got a good voice. Does it matter that I can’t pronounce my R’s?”

Albert said, “It only matters if you’re singing songs with R’s in them.”

My point is that you could be worrying too much, if leaving the EU without a deal would affect only a small proportion of your costs or sales, or if you have alternative sources of supply.

Finally, what about a soft Brexit?

You cannot assume that a deal would remove or greatly reduce all the above risks. Not every industry or every activity will necessarily be protected. Not every arrangement will be cost-free.  Many people have said that uncertainty is bad for business. Yet there was always going to be uncertainty during the negotiating period (and probably beyond, as the devil is in the detail). M Barnier has rightly said several times that nothing is agreed until everything is agreed. Anything else would tie negotiators’ hands too much. However, it means we will have to live with uncertainty right until … whenever everything is certain.

Dice. Uncertainty is not going away.
Dice. Uncertainty is not going away.

If you want to go through any or all aspects of the impact Brexit might have on your business. Let me know.

john@jhmriskmanagementservices.co.uk

01925 445215

 

Smartmeters: you know the benefits, but what are the risks?

You do know the benefits of smartmeters, don’t you?

Smartmeters give you and your electricity provider access to uptodate information about your electricity consumption. Therefore:

  • People don’t have to go to the trouble of reading your meter monthly or whatever
  • You can see if an appliance is using more electricity than you thought
  • If you accidentally leave something switched on, you’re more likely to notice.
  • You can take action promptly to reduce waste
What risks come with smartmeters?
  • Some people claim the installers were inexperienced and/or incompetent, causing an electrical fire. Others claim there was a risk but no fire occurred.
  • Some of these gadgets have not worked properly and generated excessive bills
  • Others have not worked at all
Surely not all smartmeters are that bad?

No. The bad cases are probably a tiny percentage that gets the most publicity. Anyway, let’s hope the installers have learnt from their mistakes, as we all should. The risks were probably always small and should be declining.

Is now a good time for getting smartmeters?

Not necessarily. There are three things to bear in mind.

  1. Firstly, you don’t get the benefits automatically. You have to look at the smartmeters and act on what you see. It’s all too easy to assume that you’re using energy efficiently just because you have had one installed.
  2. Secondly, the benefit depends on how inefficiently you were using electricity in the first place. If all your appliances are efficient, and if you are diligent about turning things off or down, when not needed, there is not much a smartmeter can do for you.
  3. Thirdly, the potential savings are bigger if you are using a lot of electricity. If you live in a small house, if you are not in very much, if you don’t have many electrical appliances, then there won’t be much scope for savings in any case.
So am I for or against smartmeters?

It depends on your situation. For many people, installing a smartmeter could be a great idea. For others, a waste of time. Sadly, for a few, it could be a really bad move.

Like anything else, you need to weigh the potential benefits with the costs and the risks. Perhaps you need to talk to someone about this or some other risk affecting you or your business. You know how to contact me.

If you want to save money on electricity, gas, phones or broadband, ask me or go to www.utilitywarehouse.org.uk/johnhmurray

Here are two books to help you study in the new term

If you are going to  study business studies or something similar

You will want to understand managing risk. Here’s a simple guide I have written that you could find useful: Risk and Win!

It is published by Business Expert Press of New York. Its contents are as relevant whether you are going to study in the USA or the UK and probably most other places too.

If you think “risk management” is a bit of meaningless management-speak, this is the book for you. The World is full of risks and they all need managing. In fact, we all manage risks all the time whether well or badly. Every decision we make involves making some assessment of the risks involved. Risk management is simply an attempt at doing it more explicitly, scientifically and, hopefully, effectively. In this book, you learn more about the “Why” and the “How” of risk management, and you will find some examples of how not to do it. I have tried to explain it in everyday language and show how it can be applied in a small business to your advantage.

Whatever you study you will need statistics

You may be a producer of statistics or not. You will certainly be a consumer of them. Here’s a book to help you avoid the pitfalls.

It is available on Amazon and Kindle

How To Avoid Being Misled By Statistics by [Murray, John]

Three kinds of people ought to read this book.
Firstly there are those who use statistics in their work: accountants, scientists, advertisers, marketers, politicians and journalists. If you are in one of these categories I would like to help you to maintain, or aspire to, a reasonable standard of honesty and integrity, so that people can trust what you say, and so that you do not even inadvertently mislead yourself as well as others.

Secondly there are cynics who think statistics can never be trusted and are just tools used by liars. I want to show that they can be used properly, and also that with a little thought, we can all learn to spot the false or exaggerated claims, the non-sequitors, and the unsubstantiated assumptions. Then we will be able to see the truth when it appears.

Thirdly, there are the huge number of ordinary people who get totally confused and sometimes, sadly, misled, by statistics. I want to help you make sense of what you read or hear, and be able to be confident in sorting the facts from the hype.

It is for this third group that this book is really written. If the other two groups benefit, I will be glad, but if you are in this group, please read on. I hope you will enjoy it, but above all I hope it will empower you.

Whatever you are going to study, you will find this book worth keeping beside you.

What have the birk and the burqa got to do with your reputational risk?

If you don’t have any clients who wear burqas, still read on!

When it comes to the burqa or other aspects of dress codes, I do not intend to advise the former Foreign Secretary or anyone else. I am trying to help you manage your reputational risk. Similarly, my recent article about the row in the Labour Party (remember them?) over antisemitism was not about politics but about  managing this same risk. The current row is certainly affecting the brand image of the Conservative Party as well as that of Boris Johnson. What could affect yours?

Let’s put the burqa row in perspective

People’s views on this subject don’t seem to be based on the issue itself, but on their views on:

  1. Boris
  2. Islam

Few people will not have opinions already on these two subjects. Some people have noted that those attacking Boris most loudly tend to be remainers in the Tory Party, whilst those who defend him tend to be Brexiters.

My point is that the reactions might have been different had anyone else said what Boris said. I expect Boris was aware of that when he wrote the article about the burqa. He probably wanted to create some controversy, as he likes and needs publicity. Any kind. He probably guesses that the people he is offending are not likely to be too fond of him anyway. Meanwhile, his supporters might include many who either don’t care, or share his views.

What is the lesson for you from the burqa row?

As I said in my article on antisemitism in the Labour Party, context is everything. Some people are always willing to take offence, even on other people’s behalf, especially if the culprit is someone they don’t like. Who would be quick to point to allegedly offensive elements in  your advertising, publicity or press releases?

Would a perceived offence affect your reputation among the people you want to do business with? That would probably depend on the nature of your product or service and on the type of image you have cultivated. Any hint of misogyny could be catastrophic if your target demographic was young(ish) women. It might be less so if you were managing a night club.

All right! What about the burqa issue itself?
  • I am aware that there is no requirement in the Koran for women to wear any particular items of clothing, so long as they dress modestly. The interpretation of that varies among different schools of Islam and different individuals.
  • Boris did not call for a ban, but merely stated that in his personal opinion women in burqas looked ridiculous. Cannot anyone express an opinion about anyone else’s appearance?
  • If someone criticised or ridiculed the dress of Christian clergy, from mitres to dog-collars, it would offend a lot of people. However it would not lead to calls for sackings or disciplinary action.
  • When I try to look at this objectively, I think Boris’s critics are overreacting. However, as I have said already, context is crucial.
A monk. Is his habit ridiculous in the 21st century?
A monk. Is his habit ridiculous in the 21st century?
What is the context of the burqa row?

The context is of a rise in hate crime, of immigration being a toxic issue, of the Windrush scandal and of many British Moslems feeling unwelcome. In this context, Boris’s comments were unwise and potentially inflammatory, especially coming from such a high-profile individual.

My advice on managing your reputational risk is to think about the context in which you are operating. Objectivity is not enough.

 

Antisemitism – how not to manage your reputational risk

Why is Labour’s row over antisemitism relevant to your business?

The subject of this blog is not antisemitism. I will say, however, that I am not a Jew but Jesus was (and arguably is). Therefore, I fail to see how some people can call themselves Christians and hate, disparage or discriminate against Jews. The subject is the management of your reputational risk.

A preacher preaching. Is he for or against antisemitism?
A preacher preaching. Is he for or against antisemitism?
Who is in a row about antisemitism?

The Labour Party and especially Jeremy Corbyn. This is because Labour MP Margaret Hodge has accused him , in a very public and intemperate way, of antisemitism. The party is now subjecting her to its disciplinary process. Opinion is polarised and the party is getting a lot of publicity of the sort it could do without. The words ‘own’ and ‘goal’ come to mind.

Why has Ms Hodge accused Mr Corbyn of antisemitism?

The National Executive Committee (the NEC) has been studying a report on the issue and has adopted most of its recommendations. The main area of disagreement is the definition of antisemitism. The recommendation was to use one the International Holocaust Memorial Committee produced, which many governments and other organisations use. The NEC is trying to change some of it, as It claims that the aim is to avoid prohibiting reasonable criticism of Israel. Others argue that the existing definition provides for that anyway . They say the NEC is trying to water down the party’s response to the issue. Jeremy Corbyn was the target of Ms Hodge’s anger, and that of many others, because he expressed sympathy with the NEC.

Is this antisemitism or are Jews (and others) overreacting?

This is where we come to my main point. People interpret words and actions according to their context. If this question of the definition of antisemitism had arisen in a different context, I think many people, including myself, would have said the NEC had a good case. However, the background is that many people have complained that the party has taken complaints of antisemitism too lightly over the last few years, while instances of it have been increasing. Some people have accused the party leadership of complacency and others even allege complicity. Regardless of the actual situation, now is the time for the leadership, and the leader, to … lead. They need to show that they will not tolerate this form of racialism any more than any other. To show it, at this time, means more than to just say it.

How does this apply to your business?

I have made complaints at times, when I have been dissatisfied with the service from a business. How people responded has varied. In many cases, the result was of damage limitation. Sometimes the reaction was so good that I ended up feeling well-disposed towards the organisation. People seemed to care. All too often it was not like that. I have had denials, unconvincing explanations, non-apologies and even non-responses. One organisation told me that mine was the first complaint they had had. They then referred it to the individual against whom I was complaining. His reply was condescending and complacent. I no longer do business with them.

What do you have to do?

What might be a reasonable response to a general enquiry is unlikely to work when things have already gone wrong. You need to try extra hard to undo the damage. The complainant is likely to be suspicious and easily offended. All this is doubly true where the press gets involved or where the matter is on social media. Don’t pour petrol on the flames!

Most people will be unhappy that the Labour Party is taking action against Margaret Hodge, when several people who have demonstrated antisemitism have got away with it. That’s how it looks, and looks are what matters in managing your reputational risk.

I have written previously on the subject of the reputational risk in relation to the Hillsborough Enquiry.

Perhaps you need a Public Relations specialist. Or a Risk Management consultant. You know where to find me.

 

To manage the risk of fraud, is honesty the best policy?

Do you encourage honesty among your employees?

Fraud occurs where employees or others lack honesty.  I have written several times about various ways you can protect your business against fraud. Barry Zalma’s Insurance Fraud Letter has provided many examples of frauds and has shown that anti-fraud measures pay for themselves.  I recently advised you to involve employees and others as allies against fraud, but now you need to think about one other important individual. Yourself!

How does your own honesty affect others?

Most of us believe that two wrongs don’t make a right. Yet many people think they are justified in defrauding someone if they consider him or her to be dishonest. Even people who wouldn’t defraud you might not be quick to expose someone else’s fraudulent activity, if they think you are getting your just deserts.

Where does your honesty show in your business?

Are you honest and transparent in your dealings with:

  • Clients?
  • Prospects?
  • Partners and colleagues?
  • Employees?
  • The public?
  • Regulators?
  • The taxman?

Employees notice, and they develop an image of you and the business, which affects how they treat you.

Is honesty the same as openness?

Not necessarily, but I mentioned openness because people’s perception of you matter. If you are secretive about everything, people are likely to use their imaginations to fill in the blanks in their knowledge of your dealings. This seldom works in your favour.

Happy and sad masks. Do you display honesty to your employees?
Happy and sad masks. Do you display honesty to your employees?
Are you evenhanded in you approach to honesty?

In some organisations you are more likely to be sacked for fiddling your car allowance than for large-scale misselling. There’s an old rhyme, dating from the time when common land was being enclosed by landowners to the detriment of small farmers:

The Law will punish man or woman

Who steals a goose from off the common

But lets the greater felon loose 

Who steals the common from the goose.

Does that apply in your business?