Businesses in 2018 will face profound uncertainty because of the increasingly personalised and assertive style of national leaders whose decisions are hard to predict, according to Control Risks.
This forecast comes in the London-based risk consultancy’s annual RiskMap, a political and security risk forecast for business leaders and policy makers, published today. Articles cover China; India; Russia; North Korea; the Middle East; and Brexit; and in terms of economic risk, cyberspace, and terrorism. While the world is enjoying the highest economic growth in a decade, the geopolitical outlook is characterised by uncertainty and confusion, according to the consultants. For colour-coded maps of the world and continents in terms of risk, such as travel risk, visit https://www.controlrisks.com/riskmap-2018/maps.
Richard Fenning, pictured, CEO of Control Risks, said: “Despite the most positive global economic outlook since the end of the financial crisis, we are entering a year of geo-political fragility that has the potential to trigger shockwaves to global stability and business confidence. The biggest risk is that the next world order will be imposed, not agreed, set-off by further nuclear brinksmanship between the US and North Korea, or wide scale destabilisation in the Middle East because of escalating Iran-Saudi Arabia rivalry.
“While these events are unlikely, what is certain is that global dynamics and perceptions of risk are being shaped by a more robust, personalised and unpredictable style of political leadership in many parts of the world, making business planning very difficult.”
On technology and the evolution of extortive crime, CRG analyst Joseph Smith for example writes that extortion, threats or digital crime are open to a multitude of people who would never dream of wielding a weapon, but have no compunction about causing financial and reputational loss, or psychological stress and trauma.
He writes: “While many extortionists still have the capability to carry out their threats, many do not. Their target is left to assess whether the threat is empty, or whether the perpetrator genuinely has the intent and capability to carry it out. Unlike kidnapping, extortion is not bound by what is possible, but instead by what is credible. Rather than actually causing physical harm, extortionists simply have to claim convincingly that they can and will do so, or already have.” For his article in full, visit https://www.controlrisks.com/riskmap-2018/articles/technology-and-the-evolution-of-extortive-crime.
There is some good news; the overall number of terrorist incidents worldwide, as well as the number of estimated casualties, declined in 2017 compared with 2016, according to Control Risks data. The essential drill down reveals the inevitable nuance. The decrease was broad but uneven, and multiple countries experienced increased terrorist activity because of shifting conflict and militant group dynamics.
In an article, directors Jonathan Wood and Shawn VanSlyke write: “The emphasis on the high-impact acts of terror carried out by Islamist extremists in Western cities, notably Islamic State (IS), has deflected attention from other ideological actors, especially right- and left-wing extremists, compounding the difficult and delicate challenge of detecting and responding to radicalisation.”
The company reports these as the key risks facing businesses in 2018:
North Korea escalation – War on the Korean peninsula is unlikely, but while the paths of escalation are clear, de-escalation is harder to plot. The search is on for the least bad option. The risks of miscalculation and accidental escalation are the highest they’ve been since North Korean leader Kim Jong-un assumed power.
Large-scale cyber attacks against infrastructure – 2017 was the year of major but random disruptive attacks. 2018 could see the likes of WannaCry, NotPetya and BadRabbit recur, but in a more powerful, targeted and disruptive manner. National infrastructure systems are particularly at risk. Such attacks will target primarily countries in regions of heightened security and military tension. Attacks on the UK will be unlikely due to factors including a lack of significant international conflict involving the UK and a strong cyber defence posture from UK agencies.
US gets protectionist – Low likelihood, high impact, but the threat is there: in a year of mid-term elections, NAFTA negotiations fail to make enough headway, Donald Trump pulls the US out of NAFTA and the WTO, and goes after China on trade, causing profound disruption to international commerce.
Regional rivalries in the Middle East – Ambitious Saudi Arabia and assertive Iran will not go to war, but across the region their rivalry will inform and inflame conflicts and enmities in Syria, Lebanon, Iraq and Yemen and between Israel and the Palestinian Territories.
Personalised leadership – Astride the business risk landscape is a collection of assertive world leaders who rely heavily on nationalism and, to varying degrees, populism. Prone to capricious decision-making, they find foreign companies convenient targets. More than ever, knowing the mind of the person at the top is essential.
Fenning added: “While 2018 will be a turbulent political year, heavily influenced in many areas by heightened nationalist pressure, global businesses must go into January with a cool head. Trying to understand the motivations of global leaders and the potential impact of their actions will be critical to making the right strategic business decisions.”
For the RiskMap’s regional commentary, visit https://professionalsecurity.co.uk/news/case-studies/riskmap-2018-regional-commentary/.
