The top 10 South African risks match the top three global risks, which show African businesses have similar concerns as other companies around the world. Businesses across Africa are also increasingly concerned about business interruption as it has become the continent’s top risk in 2020 from 5th in 2019.
Although Changes in legislation and regulation (#3 with 27%) and Climate change (#7 with 17%) are the biggest climbers globally, the South African responses show two new risks, namely Critical infrastructure blackouts (SA’s #5) and Macroeconomic developments (SA’s #7). This refers to the ESKOM load-shedding and corporate fears of a recession and debt accumulation. In South Africa 2019 was the year in which the bad news about the economy outweighed the good news.
Global risks – key findings
Cyber risks continue to evolve
“Incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands. Five years ago, a typical ransomware demand would have been in the tens of thousands of dollars. Now they can be in the millions,” says Marek Stanislawski, Deputy Global Head of Cyber, AGCS. He highlights that many incidents are the results of human error and can be mitigated by staff awareness training’s which are not yet a routine practice across companies. The unavailability of critical data, systems or technology, either through a technical glitch or cyber-attack, can be critical for any company, big or small.
Business interruption – an undiminished threat with new causes
Although business interruption dropped to the second spot, the trend for larger and more complex BI losses continued. Fires and natural catastrophes are still the major causes of business interruption losses. Businesses are also increasingly exposed to the direct or indirect impact of riots, civil unrest or terrorism attacks.
Changes in legislation
Changes in legislation and regulation rank third in the 2020 Risk Barometer, up from fourth in 2019 (#3 in SA as well). Globally, trade wars and tariffs, economic sanctions, protectionism, Brexit and Euro-zone disintegration all have an impact on companies. According to Ludovic Subran, Chief Economist of Allianz, around 1,300 new trade barriers were implemented in 2019 alone. New regulatory challenges in the next decade will focus on environmental impact, de-carbonization and climate change. “EU sustainability regulation is nothing less than a game changer. The impact on corporates will be as wide-ranging as that of the new rules on accounting and data protection were in the past,” says Subran.
Risks, in all shapes and forms will have a critical impact on companies’ operational performance, financial results and reputation with key stakeholders. It’s therefore important to address these risks.
Political considerations trump ethics in SA
It is sad to note that climate change only ranks sixth in a country which is one of the major contributors to pollution in the world. Despite having more than ample resources to go fully green as far as power generation is concerned, we stick to dilapidated coal powered resources which can hardly be maintained any longer. The reason for this is not so much the lot of coal miners as it is the potential loss of votes. The result of this is the implosion of the South African economy in exchange for political power.
Click here to view South Africa’s top 10 risks.
Click here to download the Allianz Risk Barometer 2020 top 10 threats.
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