Author: Neil McGregor, Vice-Chair for Corporate Governance & relations with the British Chambers of Commerce, immediate Past Chair, BRCC

Bucharest – 4 March 2022. TheBizz is a business publication, so I do not intend to expound on matters of politics and warfare here, other than to observe that the events of the last few days have been a catastrophe for all involved. My sympathy goes to the victims of this abominable war, wherever they may be. My hope is encouraged by the humanity demonstrated by all who are seeking to help the direct victims of the fighting. Clearly this unnecessary calamity will affect most if not all of us, to a greater or lesser extent. At this time, the words of John Donne come to mind:

“No man is an island entire of itself; every man is a piece of the continent, a part of the main; if a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as any manner of thy friends or of thine own were; any man’s death diminishes me, because I am involved in mankind.

And therefore never send to know for whom the bell tolls; it tolls for thee.”

At the time of writing, it appears that matters may get worse before they get better, but what is certain is that the world has changed and with it, the business world has changed also. The catastrophe is here. We can lament that it has happened, but business in particular needs to find a way forward in this new world.

We have seen sanctions applied to two European states and their banks disconnected from the mainstream financial system. Businesses in the UK and in the EU clearly need to understand how to navigate these new restrictions on doing business with the Russian Federation and Belarus, as well as observing legal sanctions applied to designated individuals and businesses. The speed with which sanctions have been imposed – and applied – over the last few days suggests that it would be prudent to regard this as a “work in progress” which needs to be actively monitored. In the UK new legislation on economic crime is being fast-tracked and there is a published list of those subject to financial sanctions: https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets.

No doubt there will be those who seek to find a way around sanctions. Business can also expect to see much greater attention being paid to the source of money. This is not the time to relax vigilance on anti-money laundering checks and other “know your client / customer” requirements.

There is also increased reputational risk to consider. Even if business is possible, do you wish to be known as dealing with people or companies which are, fairly or unfairly, linked in the public perception with those who are responsible for acts of aggression, human rights abuses and so on?

Insurance. War (whether declared or not) is a common exclusion in insurance policies. Businesses should check their cover and adjust their operations if they find that they do not have the right cover in place. A related point is that lessors of assets such as aircraft, ships and other means of transport are likely to have restrictions on where those assets can be used. Civil aviation in a large part of the Eurasian landmass is going to look very different.

Charitable readers of this article will no doubt want to do as much as possible for the refugees and other victims of the war, but please do not forget that businesses have a greater ability to generate the resources needed to for relief if they are performing well. There is already economic disruption and there will be winners and losers here, as with any other crisis. However, there is also another heightened risk to business operations, that of cybersecurity. This should not be new to readers, but it would not be surprising if both state as well as non-state actors become more active in attempts to disrupt business as well as wider society. Some businesses will already be aware of the website of the UK’s National Cyber Security Centre but for those who are not, here is a link: https://www.ncsc.gov.uk/guidance/actions-to-take-when-the-cyber-threat-is-heightened . The website includes advice tailored for individuals and SMEs as well as larger companies.

I hope that we shall all see better days. In the meantime, we need to make sure that business functions and generates the wealth necessary to fund the protection of the freedoms and prosperity which we are lucky to enjoy, as well as providing the resources to support those who are not as fortunate as we are.

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