Economic Woes Dominate Regional Risk Fears

The World Economic Forum has issued its Regional Risks for Doing Business 2019 report with the threat to the global economy the major concern.

The survey polled nearly 13,000 business leaders in over 130 countries, with fears of “fiscal crises” the biggest risk to doing business at a global scale.

Globally, three of the top five risks are economic-related with “unemployment or underemployment” coming in third and “energy price shock” ranking fourth. These risks have strong links to social disruption and contribute to “failure of national governance” ranking fifth and “profound social instability” ranking sixth. “Cyberattacks” are the second biggest challenge for executives, and the most important one for European and North American businesses for the second year in a row, highlighting the increased sophistication and proliferation of this type of attack.

The report is published in partnership with Marsh & McLennan Companies and Zurich Insurance Group with Tulsi Naidu, (pic) chief executive of Zurich UK warning that while the economy is a worry so is the threat of cyber crime. 

“Of particular note to the UK, is the finding that cyber-attacks are the most pressing risk for CEOs of the four largest EU economies (Germany, France, Italy and the UK), while data theft comes sixth across Europe,” she added. “Data breaches and cyber-attacks have caused billions of pounds of damage to organisations across the globe. These attacks are becoming increasingly frequent and sophisticated at an organisational and at a personal level, and it is vital that organisations and individuals take the right precautions to protect themselves.  

“While organisations are increasingly alert to the impact cyber-attacks can have, many do not yet fully appreciate the dangers, and must step up their efforts to combat the threat. As such, this is an area of insurance we expect to see grow.”

John Drzik, President of Global Risk and Digital at Marsh, added: “Cybersecurity remains the most concerning risk to business leaders in advanced economies, and growing technology dependence for many businesses will only amplify this. Combined with fractious geopolitical developments, and growing economic concerns, executives face a very challenging portfolio of potential threats. Business leaders should re-evaluate their underlying view of the global risk environment and make greater efforts to strengthen their corporate agility and resilience.”

Environmental-related risks are the top concerns in South Asia and in East Asia and the Pacific, with both regions having suffered devastating natural disasters and extreme weather events. Social challenges rank high in Eurasia, affected by economic slowdown, and Latin America and in the Caribbean, where governments are still aiming to deliver critical social services.

In the Middle East and North Africa “energy price shock” leads due to ongoing price and production volatility, and in sub-Saharan Africa, where youth unemployment is above 13%, executives are worried by their economies’ inability to create jobs. While global cooperation is still the most effective tool to address these varying risks, the report’s mapping highlights the areas in which regions can act.

“At a time when global economic growth appears fragile, business leaders are deeply concerned by their governments’ fiscal resilience. Meanwhile, cyberthreats remain a major risk due to their rapid evolution and increasingly disruptive potential,” said Emilio Granados-Franco, Head of Global Risks and Geopolitical Agenda at the World Economic Forum. “But in examining risk at the regional level, we also see various, interconnected drivers shaping diverse risks landscapes. Only by addressing economic risks and societal, technological, and environmental risks in an integrated manner, can stakeholders truly build resiliency.”