Global risk predictions part three - Africa and the Gulf

Global risk predictions part three - Africa and the Gulf | Insurance Business

Global risk predictions part three - Africa and the Gulf

The following is the third and final part of our three-part series looking at global risks in emerging markets. Earlier we have looked at Asia-Pacific and India – in this final part, we examine South Africa and the Gulf. The views expressed within these articles are not necessarily reflective of those of Corporate Risk and Insurance.

South Africa
The following is written by Zanele Makhubo, CFIRM, director enterprise risk management and business continuity in public sector – chair, South Africa IRM Regional Group.

Extreme weather
The unpredictability of weather patterns due to climate change poses a serious risk across the globe.

In South Africa we have experienced an extreme heatwave which was accompanied by heavy thunde storms. There is a risk of potential tropical cyclones. To mitigate the risk of severe damage to human and animal life, disaster risk assessment and scenario planning needs to be conducted to inform the resilience strategies. This requires a multidiscipline approach of disaster management competencies that are smoothly coordinated across the spheres of government and the private sector. Investment in new technology and disaster risk management resources is critical to keep up with the forever changing climate.

Political risk
The conscience of political leadership is tested in relation to individual integrity and ethical behaviour. Our society needs leaders who are not easily influenced by corrupt activities.

We are going into elections in May 2019 and society at large is demanding highly principled leaders that will uphold the rule of law to the highest standard, and a leadership that understands the collective and consultative decision-making process for the benefit of the country in all respects.

Reputational risk
Both government and business must understand the value of a good reputable organization. And they must understand that coming from the recent past of state capture and corporate scandals, their governance structures need to adhere to the rules of the country in conducting business locally and globally. Organizational values must not only be on paper but be included and embedded into the ways in which the whole of the business’s activities are conducted.

Land ownership debate
The land debate will gain momentum as the country goes into elections in early 2019 and the crux of the matter is to understand that it is about restoring dignity and equality. It is a very sensitive debate and all concerned must treat it with the caution that it deserves.

Gulf region

The following is written by Darren Mullan CFIRM, AECOM and Chair of the new Regional Group for the Kingdom of Saudi Arabia and the Kingdom of Bahrain

Across the Gulf Cooperation Council (GCC) region, I have selected a number of trends which continue to present both risk and opportunity within the wider context of continued regional socio-economic and political reform.

Economic growth
A recent IMF World Economic Outlook report raised near-term economic growth forecasts across the GCC states, despite a global downward economic forecast.

While this regional economic growth will continue to be driven by increased oil-related revenue, this growth will continue to support ongoing public investment across major infrastructure and non-oil revenue generating projects (e.g. Saudi Arabia’s 2030 Vision plan).

However, within this overall regional economic growth some GCC countries are still recovering from recent contraction, so pockets of risk still exist within specific countries (e.g. Bahrain, UAE and Oman) and sectors (e.g. residential construction).

Taxation
As part of the wider economic reforms across the GCC region, the introduction of new or additional taxation (e.g. VAT) has either happened, or is planned, across several countries. As outlined in a recent ICAEW Market Insight report, this trend towards increased taxation, as a means of GCC governments raising non-oil revenue, may inadvertently constrain some of the upside of the wider economic growth (e.g. consumer retail).

Demographics
Across the GCC region, the bulk of the population is predominantly below 30 years old. In turn, this is continuing to present both opportunity (e.g. meeting the needs and aspirations of these emerging consumers) and risk (e.g. meeting the increased demand for degree-level education and associated employment opportunities). According to a recent DOC Research Institute publication, within a region that has traditionally relied on imported skills and labor, 2019 will continue to see increased labor reform legislation across GCC countries to promote the employment of local citizens.

In conclusion, the GCC has historically been a region of both risk and opportunity and 2019 will be no different. In turn, as a profession we must continue to help our respective employers and clients to navigate the risks and opportunities associated with both wider global trends, as well as the specific headwinds within our particular GCC countries and sectors.