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Major risks threaten frontline services says Zurich report

The future of many hospitals, local authorities and charities is at stake as the UK faces an increase in major incidents, warns a new report out today.

The Risk and Response report, produced by Zurich Municipal, with research from Ipsos MORI and CIPFA, predicts that there will be more major incidents in the next five years.

Threats including flooding, financial crises, data security lapses and supplier insolvencies are set to become more prevalent, have greater impact, and cost more. Over half (54%) of public sector leaders surveyed believe there is an increasing risk their organisation will have to deal with a major incident in the next three years.

Public sector organisations including hospitals have confirmed that severe weather risks top their list of worries.

But with local public sector organisations becoming cash-strapped in the current austerity climate, their chance of surviving and recovering from the immediate and longer-term effects of major incidents is significantly compromised. At worst, some organisations may be forced to cut frontline services, or fold altogether.

Research conducted amongst Finance Directors for Risk and Response found that:

  • 58% say the financial reality is challenging their ability to manage a major incident risk. More than two-thirds (68%) add that further central funding cuts as the biggest future threat to their ability to respond and recover
  • Nearly half (49%) are concerned their reserves will be drained over the next three years
  • Around three quarters (71%) say depleted reserves will prevent them from being able to recover from major emergencies
  • Over half (52%) agree that new market dynamics may introduce an increased risk of insolvency

Anne Torry, Managing Director at Zurich Municipal, said: “Against a climate of tough decision-making and cuts for public sector organisations, our research shows that many are being forced to dip into their reserves just to continue delivering core frontline services. This means there will be little spare cash to draw on if disaster strikes.

“At the same time, the types and impact of major incidents is changing and issues like data loss, cybercrime and supply chain failure can have a serious impact on the community. For example, with so many critical community and social care services now relying on highly sensitive personal data, a data integrity failure can quickly present real security concerns.

“While many public sector leaders we spoke to feel confident in their immediate response to an incident, they are much less optimistic about getting communities, services and systems back to normal in the weeks and months after a major event.”

Zurich is also warning that many public sector organisations are not preparing fully for a new generation of major incidents, but instead focusing on the more ‘known’ risks like flooding. Just a sixth (15%) of public sector leaders surveyed  said IT security and failure was a high priority major incident risk for their organisation, while only 4% of leaders list outsourcing as something they believe will increase the chances of a major incident occurring. According to Zurich, these risks pose an increasing threat, as much of the public sector turns to new modes of service delivery.

“Many organisations have had to cut into their core strategic functions, making them more vulnerable to the wide range of major incidents on the horizon,” continued Anne Torry. “It is therefore essential the public sector, local communities and wider stakeholders adopt a more collaborative long-term approach to contingency and emergency planning. Failing to do so could have damaging repercussions for public services.”

According to Zurich, the key major incidents threatening the public sector are:

1. Severe weather event

2. Financial crisis

3. Supply chain failure

4. Global systemic event

5. Data loss

6. Major accident

7. Reputational PR disaster

8. Governance failure

9. Malicious attack

10. Industrial action

About Ralph Savage (137 Articles)
Insurance and legal journalist Ralph Savage has written extensively for the financial and professional services sectors, most notably as News Editor of Post Magazine. He ghost writes regularly on behalf of FTSE 250 CEOs, leading counsel and senior professionals including solicitors, insurers, accountants and brokers.

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