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 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 their 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 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, 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.”
For a copy of From Risk to Reward – Managing Risk in Consulting Relationships, please visit www.mca.org.uk. This MCA report contains up to the minute insight on risk management in consultant/client relationships and the recession from procurement professionals and leading consultants in the following MCA member firms:
Change Management Group
Turner & Townsend
For more information, please contact:
About the Management Consultancies Association
The MCA was formed in 1956 to represent the consultancy industry to its clients, the media and government. Management consultancy is an increasingly important industry for the UK economy with management consultancy revenues for 2007 estimated at around £8bn. MCA members represent around 70% of the UK consulting sector, employ around 30,000 consultants and work with most of the FTSE100 and all government departments. Eight of the top ten UK-based consulting firms (by consulting fee income) are members.
The MCA supports its member firms with a range of services including events, publications, interest groups and public relations. The Association also works with its members to attract the top talent into the industry. The MCA provides advice on the selection and use of management consultants and is the main source of data on the UK market.
More than 3,800 professionals at Lockton provide more than 15,000 clients around the world with insurance, benefits, surety and risk management services, offering an uncommon level of client service. From a modest, home-based insurance agency, Lockton has become the largest privately owned insurance broker in the world.
It was founded by Jack Lockton in Kansas City, Missouri, USA, in 1966. Lockton International is a partner in EOS RISQ, Europe’s leading insurance broking and risk management consultancy. Lockton Companies International Limited is authorised and regulated by the Financial Services Authority.