According to Lloyds TSB Corporate Markets’ inaugural half yearly Business Risk Report more than 80% of British businesses said they had no hedging strategies in place despite concerns about financial market risks and their potentially negative impact. The report, which captured the views of 2,579 businesses across the UK, showed 84% lack any measures against financial market risks.
Only 6% of companies said they had a hedging strategy in place to protect against inflation risks, while 9% had guarded against commodity prices and 10% were ready to face FX risks. Similarly the wholesale sector is the least prepared with nine out of 10 reporting their hedging strategies are deficient compared with the construction and hotel & catering industries which seem the most prepared, even though only 12% say they have risk management strategies in place.
Clare Francis, managing director and head of sales and derivatives structuring, Lloyds TSB Corporate Markets, said: “Our report clearly shows that most UK businesses are not as prepared for the financial volatility as they would like. While all sectors express concerns about the impact of interest rates, foreign exchange movements, commodity prices and inflation, the overwhelming majority still have some work to do to reflect this in their hedging strategies.”
