Economy

Report lists market volatility, political risks as threats to African business

by Modestus Anaesoronye

January 19, 2017 | 2:00 am
  |     |     |   Start Conversation

Companies operating in Africa are increasingly worried about the unpredictable business environment where markets are volatile and political perils, such as protectionism or terrorism are on the rise.

Other growing concerns are digital dilemmas arising from new technologies and cyber risks, as well as natural catastrophes.

These are the key findings of the 6th annual Allianz Risk Barometer analysing corporate risks globally, as well as by region, country, industry and size of business.

In order to anticipate any sudden changes of rules that could impact markets, companies will need to invest more resources into better monitoring tools and policy-making around the world in 2017. According to trade credit insurer, Euler Hermes, a subsidiary of Allianz SE, since 2014, there have been 600 to 700 new trade barriers introduced globally every year.

“Most African countries such as South Africa and Nigeria face macroeconomic challenges including low commodity prices, the Chinese slowdown and the tightening of US monetary policy and also suffer their own internal pressures such as inflation, weak domestic demand and socio-political tensions,” says Delphine Maïdou, CEO of AGCS Africa.

While conventional terrorism is a real concern, the growing risk of political violence events such as war, civil war, insurrection and other politically motivated incidents which focus on countries – particularly in Middle East and Africa – rather than certain locations should not be underestimated, according to Christ of Bentele, Head of Global Crisis Management, AGCS.

“The impact for globally operating businesses and our customers can be much greater and longer-lasting,” he says.

“Instability in African states such as Burundi, The Gambia, Democratic Republic of Congo, Libya, Somalia and South Sudan is a chief concern as well as the persistent Islamic terrorism of Boko Haram in some parts of Nigeria,” adds Bentele.

Globally, business interruption (BI) continues to lead the ranking for the fifth year in a row, primarily because it can lead to significant income losses, but also because multiple new triggers are emerging, especially non-physical damage or intangible perils, such as cyber incidents, and disruption caused by political violence, strikes and terror attacks. This trend is driven, in part, by the rise of the “Internet of Things” (IoT) and the ever-greater interconnectivity of machines, companies and their supply chains which can easily multiply losses in case of an incident.

“Companies worldwide are bracing for a year of uncertainty,” says Chris Fischer Hirs, CEO of Allianz Global Corporate & Specialty (AGCS) SE. “Unpredictable changes in the legal, geopolitical and market environment around the world are constant items on the agenda of risk.

“Cyber incidents is ranked in Africa with the most common threats being from hackers, disgruntled employees, negligence and competitors,” says Nobuhle Nkosi, head of Financial Lines AGCS Africa. “This is doubled-edged sword to the continent as Africa has a particular role in embracing and responding to new technologies compared to mature markets while speeding up cyber security and personal data protection legislations.”

 

Modestus Anaesoronye


by Modestus Anaesoronye

January 19, 2017 | 2:00 am
  |     |     |   Start Conversation

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