2009-06-18

By Editor, CIR

Businesses have adapted to the economic downturn by changing the way they work, a study by Ernst & Young suggests.

The firm, which surveyed a total of 570 global companies from all industries, found that 43% have made permanent adjustments to their operating models and 53% have changed their risk management processes. However only one in five companies believed that their internal controls had been sufficiently updated.

The survey also found that 45% of chief executives believe that the regulatory framework for their firm has undergone fundamental adjustments. More than 75% admitted that the speed and severity of the recession had taken them by surprise.

More than half of the companies surveyed had annual sales of more than $1 billion while a quarter had sales in excess of $10 billion. One in four companies believed that a recover was already underway, while 40% believed recovery would come by the end of the year and 20% said it would not commence before the second half of 2010.

Over the past year 86% of executives said they had accelerated cost reduction programmes, while 52% had speeded up their restructuring plans and 38% had agreed "significant" reductions in employee numbers.

Asked about their key drivers in the short term, 73% of executives cited an increased scrutiny on profitability, 55% on pricing strategy and 52% on their customer relationships. Internally, 38% said they had seen increased investment in risk.

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