BY Fraser Tennant
“Risk is a necessary precondition for opportunity”, according to a new report – ‘RiskMap 2016’ – which examines the key risks, opportunities and trends that businesses are likely to face in 2016.
The report, compiled annually by Control Risks, forecasts that 2016 will be a challenging year for businesses as they are forced to navigate escalating security and political risks.
Among the risks highlighted in the report, which claims that the security and political risk outlook appears worse than at any point in the past 10 years, are concerns pertaining to terrorism, Middle Eastern instability, cyber risk, a Chinese economy in transition, and European financial and political uncertainties.
All in all, RiskMap 2016 paints a picture of a more volatile world in 2016.
Yet the report does make clear that there are causes for optimism including: (i) the possibility of further successes of multilateral diplomacy following the landmark Iranian nuclear deal and the restoration of US ties with Cuba; (ii) stable growth in most western economies; (iii) the possibility of a gradual rise in commodity prices as the decade continues; and (iv) indications by governments that they are willing to cooperate on environmental issues.
“These risks - and many others - will continue to threaten unprepared businesses”, says Richard Fenning, CEO of Control Risks. “Whether it is the see-sawing balance of economic power between the East and the West, uncertainty about the future of commodities prices, the disconcerting metastasis of IS, the ramifications of China’s adjustment to its new economic reality, or an explosion in the frequency and severity of criminal cyber-attacks, successful businesses will need to prepare themselves to face tough challenges on a number of fronts.”
Furthermore, believes Fenning, these political and security concerns need not translate into major obstacles for businesses as he expects the relative political stability of Western democracies to give their economies a “renewed competitive advantage” over developing economies that are faced with stagnant growth and political unrest (such as China and India).
Continued Mr Fenning: “It would be easy to think the world has never been more unsettled, or unpredictable, than now. But businesses and investors would do well to remember that, despite the many risks and challenges that 2016 will present, the world has always been a shifting and unpredictable place.”
Report: RiskMap Report 2016