Control Risks, the business risk consultancy, has published its annual RiskMap report.
What are the underlying trends in global risk and security? A risk consultancy brings out each winter a ‘RiskMap’ for the following year. Here’s a digest of the 2013 ‘map’.
The consultancy argues that companies are being caught between regulation from above and unprecedented scrutiny from below. Political leaders are feeling the global gaze as never before. Richard Fenning, CEO of London-based Control Risks said: “RiskMap this year describes a world in which certainties are in shorter supply, and leadership more difficult to exercise. Managing companies or countries has become as much about reacting swiftly and decisively to changing circumstances as it has to do with the implementation of a strategy or policy.” The consultants point generally to:
• significant challenges facing world leaders in a climate where economic uncertainty and political unrest have made holding power more problematic.
• What the consultants describe as the ‘taut interconnectivity’ of global business demands that leaders constantly adapt to survive. In an era where management of crisis and the unexpected is the norm, leaders are required to operate in ‘a zone of continual uncertainty’ it is claimed. More than ever they need to be in touch, sure of their facts and supremely agile. Strategy will often take second place to subtlety.
• The corporate world faces particular challenges. The low or zero growth in the developed world is continuing to drive companies to new frontiers where the distinction between risk and opportunity is harder to define. There is potential to become risk-obsessed – trapped between the twin imperatives of risk taking and risk reduction. As the report describes, often this can lead to inconsistency and paralysis.
According to the consultants, political risk in developed markets is at its highest for decades. The report also looks at how the early promise of the Arab Spring will give way to impatience and continued turbulence across the Middle East. It sees US foreign policy interests remaining necessarily global, whatever the temptations to contract from the Middle East or refocus on Asia-Pacific. Elsewhere:
• Brazil has weathered the global financial crisis reasonably well, with the feel-good factor of the upcoming World Cup (in 2014) and Olympics (in 2016) evident. However, significant problems persist. Rampant corruption, high crime rates and inefficient bureaucracy have all tested successive governments, and President Dilma Rousseff is still searching for answers.
• Similarly on the other side of the globe in Myanmar, the warm glow from recent images of Aung San Suu Kyi embracing western leaders and the international prizes bestowed on President Thein Sein can distract from the complex process of peacefully dismantling one of the world’s most long-standing military dictatorships. The central question, going beyond the fate of individual political leaders, is how far the country is capable of building the political and bureaucratic institutions needed to navigate change.
• In Egypt, the consultants say foreign investors need not fear the Muslim Brotherhood. With a number of seasoned businesspeople in its ranks and a pragmatic approach to politics, the Muslim Brotherhood is at least as favourable to foreign investment as its chief opponents from across the political spectrum.
• Nigeria, like much of sub-Saharan Africa, is a popular investment story and Lagos specifically has become a symbol of African entrepreneurship and commercial promise. However, the dynamism of this African mega- city belies a bleaker national picture with growth hampered by chronic insecurity, poor infrastructure and a growing gulf between north and south.
Despite these intimidating challenges, opportunities for investors still exist in surprising places for those able to map and manage the complexity and significant risk of a volatile world. The consultants stress that a company or country’s ability to exploit opportunities increasingly depends on the ability of leadership to embed not just resilience but suppleness in their organisations and states.
Some country assessments
To pick out a few country assessments, in India religious extremism lurks as a persistent threat, as do unresolved and serious Naxalite (extreme leftist) and separatist conflicts. Cybercrime is growing problem and confidence in government responses to security problems is low. In Greece, the continuing economic crisis has seen security threats manifest outside the traditional hotspots of Athens and Thessaloniki. While major violent protests and the use of explosive devices remain largely confined to those two cities, increased crime is affecting the country more widely, as are the effects of the increased popularity of extremist politics. In Ukraine, the threat of serious and petty crime is high, much aggravated by corruption in government and law enforcers.
About Control Risks
Control Risks is a risk consultancy specialising in political, security and integrity risk. Visit www.controlrisks.com
