The top 10 business risks for executives and multinational companies
High unemployment is one of the top most cited risks among business leaders globally, according to a new report. Fiscal crises and failing national governments take the number two and three spots respectively. In the UK, fiscal risks and an asset bubble come in joint first place, followed by cybersecurity.
In the latest edition of the World Economic Forum’s Global Corporate Risk study, which is developed by risk specialists Marsh & McLennan Companies (a consulting firm) and Zurich Insurance Group (an insurance firm), sentiment around risks to global businesses was elicited from 12,400+ executives and senior professionals in 136 countries. The report aims at providing insight into what, on average, respondents thought to be the greatest risk within their own country in the next ten years.
Top ten
Globally, high unemployment was noted as the most concerning risk in the next ten years. Concerns are apparent on a range of fronts, from already high unemployment levels across various regions, particularly for young people, as well as changes to the labour market that see increased automation reduce the demand for low- and even high- skilled labour in various sectors.
The concern from businesses at rises in unemployment show the paradox many consumer-oriented companies in particular find themselves in amid the rise of automation. On the one hand, international corporations see AI and automation technology as an opportunity to downsize their collective staff, and consolidate profit margins in the process. On the other hand, the fewer people in work there are, the more consumers there are with limited spending power.
Other top concerns for businesses included a fiscal crisis in second, followed by the failure of national governance. Changing dynamics around the energy market may give rise to a shock in price – another key fear –although the energy market may itself become unstable as too much emphasis is placed on energy-types, such as fossil fuels, that are incompatible with future stability. Large scale cyberattacks have increased their place in the top 10 by three spots, following a number of global level incidents.
Terrorist attacks have, meanwhile, fallen in the ranking by two places, in similar vain to energy shock. For the most part, the ranking has stayed relatively stable in last year, with one place increases for fiscal crisis, national governance failure and interstate/regional conflict (the Catalonia independence vote recently reminded the world how even modern EU states are not excluded from this).
Regional risks
Regionally, some considerable differences in the top five were noted by the report. North American respondents are the most concerned with large cyberattacks – which have recently hit top companies such as Equifax and Deloitte – along with terrorist attacks, an asset bubble, a fiscal crisis or a lack of climate change adaption. Other issues weigh heavy on business leaders’ minds in South America, including national governance failure, high unemployment, social instability, a fiscal crisis or critical infrastructure shortfalls. The region remains mired in political scandals, which, with the following two risks, may give rise to a host of long-term risks for the region.
In South Asia, concerns among businesses are largely focused on high unemployment, coupled with urban planning failures and critical infrastructure shortfalls, particularly in terms of water access. In East Asia and the Pacific, a large cyberattack is the number one threat, followed by asset bubbles and fiscal crises’. In the Middle East and North Africa, concern around high unemployment and energy price shocks continue to reign.
European risks
In terms of country specific risks in Europe, the differences between regions are substantial. In the UK, fiscal risks and an asset bubble come in joint first place among those surveyed. A large-scale cyberattack (the NHS was recently impacted by the WannaCry attack) takes the number three spot. The failure of financial institutions, meanwhile, ranks fourth, while a terrorism attack comes in fifth. Unemployment took a back seat to these risks, partially due to the national unemployment rate currently being reported as having fallen unexpectedly to a 42-year low of 4.6%, according to the Office for National Statistics. In the US, concern around terrorist attacks takes the number one spot, followed by large cyberattacks, the misuse of technology, an energy price shock and data fraud/theft.
On mainland Europe, other concerns were noted. In Germany for instance, large cyberattacks and terrorist attacks come in the number one and two spots respectively. In France, high unemployment is number one, followed by terrorist attacks. Italian and Spanish businesses, meanwhile, noted financial institution failure and high unemployment, as their respective number one risk concerns.
