In euro zone crisis,companies plan for the worst

“It’s hard to make detailed plans but we need to think through how our pricing strategy would fare if there were suddenly a dismantling of the euro,” Brandgaard said. “How do we avoid falling into a trap? This is the first time I’ve asked such a question. It’s a topic that is increasingly on the radar.”

Planning for a breakdown of Europe’s 17-nation single currency is not easy. Like many business leaders,Brandgaard views a break-up of the euro as possible though not yet probable — but the odds are increasing. In a recent Reuters poll 14 out of 20 economists said the single currency would not survive in its current form — and companies are starting to plan for a worst case scenario.

Their trepidation is best summed up by Martin Sorrell,the head of the world’s biggest advertising agency WPP. “The complexity fills everybody with such appalling fear and is so complicated that the last thing in the world you want to happen is that,” Sorrell said. “But the honest answer is that,like everybody else,you try and contingency plan for any break-up of the euro zone.”

Drawing on interviews with company officials,bankers and lawyers in Europe,the United States and Asia and companies’ regulatory filings,Reuters has pieced together a picture of patchy preparedness for the possible demise of the 12-year-old euro currency,an event that would be unparalleled in recent history.

“These days,it’s a part of almost every risk management conversation that comes up,” said a senior player in London’s insurance market,speaking like many in this story on condition of anonymity because of the sensitivity to their business.

Some of the most active contingency planning is happening in European countries outside the euro zone that have strong trading links with the currency bloc — Denmark and Britain being leading examples. Of the 33 companies with the biggest exposures to the euro zone in sales terms,five are British,according to Thomson Reuters data. Health care,energy and consumer goods are among the most exposed industries.

A number of British firms,including the world’s biggest caterer Compass Group,have said they have discussed or put in place contingency plans to deal with a euro collapse but most are reluctant to give details.

Banks,brokers and exchanges are in the front line.

ICAP,the world’s top broker for foreign exchange and government bonds,said on Monday it has tested its trading system to handle the collapse of the euro zone and re-emergence of national currencies. It is not alone in carrying out ‘war games’. A senior banker at a large investment bank said he had a team of 20 people globally running all kinds of scenarios all the time. That team was now spending a lot of its time on the possible break-up of the euro.