| Risks are higher and more difficult to manage in the downturn, says MCA |
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| | Over half of Britain’s
consultants say that the
risks they face in
delivering consulting
and outsourcing projects
have risen in the past
two years as the
downturn has placed
their clients’
commercial futures and
company reputations on
the line.
A new report by the
MCA, From Risk to
Reward: Managing Risk in
Consulting
Relationships,
sponsored by risk
management specialists
Lockton, also reports a
large shift in the
nature of these risks,
with consultants most
concerned about lack of
client engagement and
clarity around
objectives. Project
budgeting and the
ability of clients to
pay were identified as
significant risks.
One result of these
changes is greater
transferring and sharing
of risks with management | |
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| | consultants.
From Risk to
Reward, based on
surveys and interviews
with senior consultants
whose firms work with
over 90 of the FTSE 100
companies, found that
61% of consultants
believe that clients are
transferring more risk
to their firm than two
years ago. Consultants
are aware of the
pressures their clients
are facing and are
responding positively to
help them through the
difficult times.
76% of clients are
now transferring project
risks to their
consultants and 38% are
transferring budget
management risks.
Two-thirds of
consultancy firms now
have fee arrangements
which are partially
linked to performance. A
further 8% are entirely
based on performance.
Alan Leaman, chief
executive of the | |
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| | Management Consultancies
Association, said:
“Although both
consultants and clients
are more conscious of
risk in the current
climate, it is
interesting that we are
now seeing more examples
of risk sharing. This
suggests that the
consulting industry is
responding well to the
current economic
pressures.”
Emily Freeman,
executive director –
technology risks at
Lockton International,
commented: “In order to
manage risk at both the
vendor and client end,
you need a
multi-functional risk
team, which includes
people from the
business, procurement,
IT, finance and lawyers.
This requires an
organisation to overcome
silo management and
create an ongoing and
empowered team.” | |
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