BY Fraser Tennant
2017 will be a year of heightened risk and uncertainty for businesses, largely driven by the results of the US election and the UK EU referendum (Brexit) and their impact on globalisation and free trade, according to a RiskMap forecast published this week by Control Risks.
The RiskMap – an annual study highlighting the most significant underlying trends in global risk and security – also notes the risks posed by political, cyber and terrorism threats, as well as president-elect Donald Trump’s tough stance regarding the global regulatory environment.
As a result of the uptick in the range of threats, Control Risks reveals that many businesses now see little distinction between perceived safe domestic markets and foreign ones rife with challenges.
In summary, the RiskMap identifies the key risks for businesses in 2017 as being: (i) political populism exemplified by president-elect Trump and Brexit; (ii) persistent terrorist threats; (iii) increasing complexity of cyber security; (iv) intensifying geopolitical pressures driven by nationalism, global power vacuums and proxy conflicts; and (v) the militarisation of strategic confrontations by accident or miscalculation.
“The unexpected US election and Brexit referendum results that caught the world by surprise have tipped the balance to make 2017 one of the most difficult years for business’ strategic decision making since the end of the Cold War,” said Richard Fenning, chief executive of Control Risks.
“The catalysts to international business – geopolitical stability, trade and investment liberalisation and democratisation – are facing erosion. The commercial landscape among government, private sector and non-state actors is getting more complex,” he added.
In response to the high levels of complexity and uncertainty forecast for 2017, Control Risks suggests that company boards should undertake a comprehensive review of their approach to risk management. The strategies they deploy to “protect value and seize opportunity in 2017”, will, according to the report, determine whether organisations are defined as Arks (having a defensive focus on core markets), Sharks (seeking to target new opportunities) or Whales (becoming too big to fail).
Mr Fenning continued: “With the seismic shift in risk scenario planning now required by businesses, we can expect the competitive playing field in many industries to see significant change as organisations respond in different ways to the multitude of complexities facing them. By the end of 2017 we will know whether or not the global economy withstood the shocks and turbulence of 2016, if the US opted for a new definition of how to exercise its power and if the great experiment in globalisation remains on track.”
Report: RiskMap 2017