It’s a new year and entrepreneurs are look into the prospect of the business environment globally. More importantly, entrepreneurs and investors are looking at Africa. Last year several reports indicated the spur in growth in many sectors within Africa – especially technology and e-commerce. In 2016, Frost and Sullivan conducted a survey which mentioned that digitization could make Africa the new China. From December 2016 to early this year, there has been growing conversations on bitcoin over various social media platforms in Sub-Saharan Africa, with many young people seeking to do online business and trade. Pertinent findings of the 6th annual Allianz Risk Barometer indicates that ‘cybercrimes’ and associated incidents is the biggest threat to the business environment in South Africa, political instability also leading threats in most countries in Sub-Saharan Africa, and Middle East, and while Business Interruption leads the global threat to Business.
Allianz Risk Barometer analyses corporate risks globally, by region, country, industry and size of business. The results are based on a survey conducted among 1,237 risk experts from 55 countries. This is the fifth consecutive time Business Interruption is leading the global ranks – having 37 per cent of response, market and macroeconomic developments leading Africa and Middle East, while cyber incidence leads for the second time consecutively in South Africa. Interruption can happen at any time and you actually do not know when you will fall victim. It leads to significant income losses, and recently, it cases have been mostly related to intangible threats, such as cyber incidents, and disruption caused by political violence, strikes and terror attacks – many thanks to Internet of Things (IoT). The continuous growth in mobile devices, usage of internet, and the easy interconnectivity of multiple devices and machines, the connectivity to previously complex structures including restricted information which causes severe damage when systems are hacked.
According to the CEO of Allianz Global Corporate & Specialty (AGCS), Chris Fischer Hirs, this year will come with its own uncertainties and businesses must brace for that. Brexit has already caused financial losses to some good businesses and pushed more UK alliance to East Africa, Trump coming into play carries a lot of uncertainties as well. “Unpredictable changes in the legal, geopolitical and market environment around the world are constant items on the agenda of risk managers and the C-suite. A range of new risks are emerging beyond the perennial perils of fire and natural catastrophes which require re-thinking of current monitoring and risk management tools,” said Fischer Hirs.
Commenting on Africa, CEO of AGCS Africa – Delphine Maïdou said “Africa has a particular role in embracing and responding to new technologies compared to mature markets. Although, this is a major concern, the biggest threats to the continent are market developments (39%), macroeconomic developments (37%) and political risks and violence (31%).” Businesses and investors look out for long and stable relationships. Instability in a country makes it difficult to attract major investments as the future usually becomes unpredictable. Africa and Middle East for some time cannot be forgotten when instability is thought of. Instability in countries such as Turkey and in Africa: Burundi, The Gambia, Democratic Republic of Congo, Libya, Somalia and South Sudan is a major concern as well as the persistent Islamic terrorism of Boko Haram in some parts of Nigeria has been impediment to business development and investment in Africa.
Focusing on South Africa, Head of Financial Lines AGCS Africa – Nobuhle Nkosi, highlighted on the cost of cyber incidents in South Africa. According to Nkosi, cyber incidents costs the South African economy around R35 billion annually with the most common threats being from hackers, disgruntled employees, negligence and competitors. Thus, a need to strengthen cyber security.
As many uncertainties face the business environment, it is essential for entrepreneurs and risk managers to ascertain much information about the various environments they operate in and strengthen plans to be immune to existing and upcoming threats.