Keeping the lights on

The 5-hour cyber security test
17th October 2022
Show all

Good morning and welcome to our Horizon Scanning newsletter.

This month, with talk of major energy shortages this winter, we discuss the unforeseen risks that this might bring, and what businesses can do about them. And our Monday Toolbox provides a range of resources for thinking this issue through in more detail.

Keeping the lights on

With energy ombudsman Ofgem last month predicting a “significant risk” of UK gas shortages, energy production and the search for new resources has become an issue of global significance. Ofgem called on people and organisations to be “prepared for all scenarios this winter.” And there has even been talk of a return to the three-day week, last seen in the 1970s.

With the clocks going back and the nights drawing in, businesses large and small need to be thinking seriously about what these eventualities could mean for them. This recent article by Risk Methods is really useful in this context. It takes you through the causes and consequences of the global energy crisis step-by-step, in layman’s terms. And it provides five steps at the end, for assessing your own risk levels.

Interestingly, many of the steps that Risk Methods suggest are rooted in supply chain analysis – including carrying out surveys directly with suppliers to check how many have contingencies. This is an approach we were advocating long before the Ukraine invasion and its effect on oil and gas and is one which we pioneered with one of our largest clients several years ago (more detail here).

Other elements to consider are the personnel factors, which will inevitably be impacted by the office closures that power cuts bring. There is more advice about this in the toolkit below.

There is ultimately no magic solution for tackling the issue of power shortages. Every company will be adversely affected if they happen. But those who weather the storm best will be those who are already thinking about the elements of resilience which could be directly and indirectly affected – from supply chains to HR to cyber security.

Number one question for your business: 

Do you know how resilient your suppliers are in the face of gas shortages?

Toolbox

Our Monday toolbox this month focuses on the issue of energy shortages. Below you will find a range of analyses, tips and pieces of guidance from around the world, about what the shortages mean and how you can overcome the problems they create.

  • This FT article from earlier in the summer explored the potential impact of the energy crisis in Germany, following warnings from Commerzbank that the issue could create a range of unforeseen economic consequences. It is well worth checking out if your work goes in or through Germany.
  •  This analysis from Deloitte earlier this year examined how gas shortages, along with other challenges like inflation, could impact the Eurozone economy in the coming months and years. It includes a comparison of the robustness of different nations to energy shortages and remains relevant a couple of months on.
  •  German management consultancy Roland Berger, meanwhile, put together this report on the topic of gas shortages last week, including an analysis of three competing scenarios: high gas prices, limited gas supply and drastic gas shortages. Central to their insight is the impact of gas shortages on wider supply chains, so it is a really important piece from a resilience perspective.
  •  This toolkit from Ready Business has some further ideas, rooted in the US context, for how you can deal with power outages. It features a set of very usable checklists and templates, for predicting the impact of energy shortages on your organisation.
  •  For those looking to the future, our longstanding client, engine manufacturer Cummins, have produced this excellent thought leadership piece about alternative fuels, sustainability and uptake. This type of thinking is vital for long-term business continuity. It also includes, at the end, a handy list of 12 ways that your family can prepare for power cuts.
  •  Finally, the law firm Lewis Silkin has put together this briefing paper on the human resources aspect of UK energy shortages – given that heating and lighting offices have a very human dimension. They include five practical steps to take in the first instance and more detailed suggestions for subsequent

Thought for the week:

“Light and heat are among the most basic human needs. No business can last without them and every organisation will be affected if we cannot rely on them this winter. The most important thing is that you have thought through the wide range of unforeseen consequences that it could have for your company if you are to lose access to something so essential.”