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3 Global Risks to Business in 2009

With financial and politically volatility all over the world, what challenges pose the biggest risk to business in 2009? And what regions may be too risky?

By Joan Goodchild, Senior Editor

December 23, 2008 — CSO —

Anyone who reads the headlines these days knows the world is an uncertain place. And 2009 will be a year that brings even more changes and uncertainty, according Control Risks, an independent, specialist risk consultancy.

The company recently released its 2009 annual forecast of the global political and security risk environment. Control Risks Analyst and Author Daniel Linsker spoke with CSO about some of the highlights that businesses need to consider before investing.

The Financial Crisis

The report indicates that while Asia at one point was thought to see little impact from the financial crisis, it now appears it will not be immune. Can you tell me more about that?
That applies not only to Asia, but to countries across the world. At the beginning of 2008, the eye might have been placed in the wrong places. A lot of attention was placed on the exposure of particular countries to the crisis. But the impact of the crisis is not so much dependent on the exposure of a country, but on its specific capability to address the risks and challenges of the crisis.

A lot of attention was placed on Russia and Venezuela; large oil-producing countries. Those countries will face problems, but they don't run the risk of collapse. The capacity of those governments to react is quite large. On the other hand you might have countries that wouldn't expect to be troubled, for example The Ukraine or Poland. These are countries that were competing favorably and were good investment destinations. But suddenly there is a downturn and the countries' stability is being brought into question. So the emphasis now is on a country's capacity to react instead of its exposure.

Our message to clients, which we highlight in the report is: It is necessary to do your homework. Each country will face particular challenges. Do your homework in the countries.

What are businesses doing to make sure they are informed?
A lot of companies have started a process of internal reckoning. Many are seeing the first few months of 2009 as a time figure out where they stand, figure out what their exposure is like. You might have operations in a number of companies you thought were fine. But the prospects for different countries vary.

One thing I would add is you have to be careful not to fall into false sense of confidence that the crisis is not going to affect a particular country. At beginning of the year, many regions were confident and thinking "We aren't going to be affected. We have been decoupled from the US. The downturn in the US or Europe will not affect us."