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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

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Now, if you look at the global situation, many countries around the world are looking to put through some kind of economic stimulus package and sets of measures to combat the impact of the crisis.

Scarcity

The report indicates scarcity will be a major risk factor for global business in 2009. Why?
There are two things they should look at. The first point and perhaps the more superficial, is that the sudden decline in worldwide commodity prices might just be temporary. There is a financial crisis so global slowdown has lifted a lot of the pressure on commodities. But basically the underlying fundamentals of scarcity are there. Even when the global economy starts speaking up again, you will get a renewed sense of urgency in terms of finding the resources and getting them to market.

Scarcity will probably be one of the main strategic challenges for business going forward; not only in 2009 but beyond. It affects everything from your supply chain to your capacity to operate. If you are operating in certain parts of the world, some countries in Africa or Latin America for instance, you will experience electricity shortages. And that is a complete no-no. You won't be able to operate what you need to operate without power.

So, scarcity, as a whole, which might have dropped of the radar a bit because of the financial crisis, is going to be one of the most strategic challenges that companies are going to have to deal with in the future.

What about food shortages? How can that impact a business?
Food is an issue because unless you are part of the food industry you might think: "Well, that won't affect me." But this year we saw food drives in some places with governments that were stumbling with trying to manage and control food shortages.

Food shortages and their associated problems bring in to question the stability of regimes and their commitment to maintaining the rules of the game. You might be exposed if your workforce in affected countries don't make enough money to be able to sustain their families. You could even look at the angle of companies in Africa endemic disease. It is a massive challenge to handle that.

Does scarcity also create security risks as well?
The problems might not be the traditional problems and they might not be where you expect them to be. I will give you hypothetical example: A fairly stable country is impacted by the crisis and unemployment shoots up. Suddenly you have massive demonstrations and you have a feeling of xenophobia in that country. So your personnel are affected. You have demonstrations against your company and there is pressure on company to nationalize industries.