ERM Next

Comprehensive U.S. Recession Impact Analysis

A diagnostic tool for assessing macroeconomic vulnerability and enterprise resilience. (beta)

Section 1: Revenue & Market Exposure

What percentage of your total revenue is generated directly from the U.S. market?

Direct revenue exposure is the primary transmission vector for recessionary shocks.

What is your U.S. customer concentration? (% of U.S. revenue from top 5 clients)

High concentration means the loss of a single key client could have a disproportionate impact on revenues.

What is the nature of your products/services sold in the U.S.?

Sales of discretionary goods drop significantly during recessions. Essential goods are more resilient.

How would you characterize the price elasticity of demand for your U.S. offerings?

Highly elastic products see demand fall sharply with price increases or income drops. Inelastic products are more stable.

Do your U.S. contracts contain minimum purchase obligations or fixed-fee structures?

These clauses provide a revenue buffer during a downturn, making your income streams more predictable.
Section 2: Financial Resilience & Capital Structure

Current debt-to-equity ratio:

A high debt load increases financial risk, as servicing debt becomes harder when revenues fall.

How much liquidity (cash reserves & undrawn credit) in months of operating expenses?

Sufficient liquidity is critical to cover expenses when cash flow is unpredictable. Less than 3 months is a major red flag.

What is your current headroom on major debt covenants (e.g., Debt/EBITDA)?

Low headroom means a small drop in earnings could trigger a covenant breach, leading to default or forced renegotiation.

What is the status of your hedging program for FX and interest rate risk?

A systematic hedging program protects against volatile currency and interest rate movements during crises.

How flexible is your capital expenditure (CapEx) plan for the next 18 months?

The ability to defer non-essential CapEx is a key lever for preserving cash in a crisis.
Section 3: Supply Chain & Operational Resilience

What is your dependency on single-source or critical U.S.-based suppliers?

A single-source supplier failing creates an immediate and severe operational disruption.

What is your inventory management strategy?

Just-in-Time is efficient but vulnerable to shocks. Safety stock provides a buffer but increases costs.

How flexible is your cost structure?

A high proportion of variable costs allows the company to scale down expenses as revenue falls. High fixed costs are a burden in a downturn.

Do you have visibility into the financial health of your critical Tier-2 and Tier-3 U.S. suppliers?

A disruption deep in your supply chain can have cascading effects. Lack of visibility is a significant blind spot.
Section 4: Counterparty & Credit Risk

What is the average credit quality of your U.S. accounts receivable?

Exposure to financially weak customers increases the risk of bad debts and write-offs during a downturn.

What is your exposure to U.S. financial counterparties (banks, insurers)?

The failure of a key financial partner could disrupt access to credit, insurance, or other essential services.

What is the recent trend in your Days Sales Outstanding (DSO) for U.S. clients?

A rising DSO is a leading indicator that customers are struggling to pay on time, signaling future cash flow problems.
Section 5: Human Capital & Workforce Risk

What is the concentration of critical skills within a small group of U.S.-based employees?

'Key-person' risk is amplified if critical knowledge is not widely distributed, making the loss of a few employees highly disruptive.

How would you describe recent employee morale and engagement in U.S. operations?

Low morale can lead to lower productivity and higher attrition, compounding the effects of a recession.

How prepared are workforce plans for potential reductions or restructuring?

Having a clear, fair, and legally compliant plan for workforce adjustments minimizes operational and reputational damage.
Section 6: Technology & Cybersecurity Risk

Is your core technology infrastructure (e.g., cloud provider, ERP) U.S.-domiciled?

Dependency on U.S. tech providers creates vendor risk. A downturn could affect their service levels or viability.

Have cybersecurity measures been enhanced to counter recession-related threats (e.g., insider threats, sophisticated phishing)?

Cyber risks often increase during downturns due to factors like disgruntled employees or more desperate external actors.

How resilient is your IT infrastructure to prolonged cost-cutting measures?

Deferring maintenance or upgrades can create technical debt and increase the risk of critical system failures.
Section 7: Regulatory & Geopolitical Risk

Are you exposed to U.S. government contracts that could be cut in a downturn?

Government spending, especially on discretionary programs, is often reduced during recessions to manage fiscal deficits.

How vulnerable is your business model to U.S. protectionist trade policies (e.g., tariffs, trade barriers)?

Recessions can trigger protectionist policies, disrupting global supply chains and increasing costs.

Is your business subject to U.S. regulatory bodies that might increase scrutiny or enforcement during a downturn?

Regulators (e.g., SEC, EPA) may increase enforcement to demonstrate action during a crisis, creating compliance risks.
Section 8: Insurance & Risk Transfer

Do you have trade credit insurance for your U.S. receivables?

This insurance protects against customer insolvency, a key risk during a recession.

Have your D&O (Directors & Officers) insurance premiums seen recent increases, or have carriers indicated concerns?

Insurers often raise D&O premiums pre-recession, anticipating a rise in shareholder lawsuits and bankruptcy-related litigation. This is a market signal.
Section 9: Enterprise Risk Management Maturity

How is "U.S. recession" treated in your risk register?

Formal documentation ensures the risk gets attention, ownership, and formal action plans.

How frequently is macroeconomic risk discussed at the Board or executive risk committee level?

Regular, high-level discussion ensures strategic alignment and appropriate resource allocation for risk mitigation.

What is the extent of your scenario analysis and stress testing for economic shocks?

Quantitative modeling helps understand the potential financial impact of severe but plausible scenarios.

Is your ERM function integrated with strategic planning and capital allocation?

A mature ERM function doesn't just identify risks; it influences key business decisions to enhance resilience.