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Globally, interstate conflicts and water crises named the biggest risks in terms of likelihood and impact
Dubai - The impact of global fiscal crises is the biggest risk to doing business in the United Arab Emirates, according to the World Economic Forum's Executive Opinion Survey, which was featured within the 2015 Global Risks Report, developed with the support of Zurich Insurance Group.
The World Economic Forum has conducted the Executive Opinion Survey every year since 1979. It interviewed more than 13,000 business executives across 144 economies for the 2015 report. Respondents were asked to select the five global risks that could threaten their ability to do business in their home country.
'Fiscal crises in key economies' was ranked as the number one risk to doing business in the UAE by 21.4% of the UAE executives surveyed. They were concerned that contagion from failures in major economies could adversely impact the UAE's business environment. In fact, fiscal crises was the primary concern for doing business in 93 (65%) of the 144 economies covered by the survey.
The second highest risk ranked by the UAE executives, with 11.2%, was an 'oil price shock'; followed by a 'liquidity crises' (10.5%), 'failure of a major financial mechanism or institution' (9.4%), and 'violent interstate conflict with regional consequences' (6.8%).
The risks to doing business in the UAE mirrored many of the same threats identified by executives in the other 144 countries. The only difference in the top five was that the global survey ranked 'profound political and social instability' as the fifth biggest risk, whereas UAE business executives did not see this as a threat in their home market.
Perhaps inevitably, given the UAE Government's commitment to the long-term development of the Emirates, the 'prolonged neglect of critical infrastructure' and 'mismanaged urbanization' ranked particularly low in the UAE, and well below the global average.
Brian Reilly, CEO of Zurich Insurance Middle East, commented: "Businesses in the UAE face a plethora of global risks. Given the UAE's position as a global business hub, and the severe impact that the previous global financial crisis had on the economy, I am not surprised to see the risk of fiscal crises ranked as the biggest threat to doing business in the UAE.
"Global risks do not respect national boundaries so it is imperative that executives are aware of the biggest risks to their business in the UAE. As a leading global insurer, Zurich prides itself on helping businesses of all sizes to identify and protect themselves from these risks."
Top Five Risks to Doing Business, by Country (ranked out of 19 risks)
Interstate conflicts and water crises remain key global risks
The World Economic Forum's Executive Opinion Survey complements the Global Risk Report, which features an assessment by experts on the top global risks in terms of likelihood and potential impact over the coming 10 years.
The 2015 report found that interstate conflict with regional consequences was the number one global risk in terms of likelihood, and the fourth most serious risk when considering the prospective impact. In terms of likelihood as a risk, it exceeds extreme weather events (2), failure of national governance systems (3), state collapse or crisis (4) and high structural unemployment or underemployment (5).
When examining the potential impact of global risks, the nearly 900 experts that took part in the Global Risk Perception Survey rated water crises as the greatest threat facing the world. Other top risks which ranked highly by impact, beside water crises and interstate conflict, were: rapid and massive spread of infectious diseases (2), weapons of mass destruction (3) and failure of climate change adaptation (5).
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About the World Economic Forum Global Risks 2015 report:
The Global Risks 2015 report has been developed with the support of Zurich Insurance Group and Strategic Partners Marsh & McLennan Companies. The report also benefited from the collaboration of its academic advisers: the Oxford Martin School (University of Oxford), the National University of Singapore, the Wharton Risk Management and Decision Processes Center (University of Pennsylvania), and the Advisory Board of the Global Risks 2015 report.
Executive Opinion Survey Methodology
The 2014 edition of the Executive Opinion Survey, conducted between February and May 2014, for the first time included a question on the risks of biggest concern. More specifically, respondents were asked to select the five global risks that they were most concerned about for doing business in their country and to rank these five risks from 1 (for the one of highest concern) to 5 (for the one of lowest concern).
To rank the 19 risks based on the level of concern, each received a score derived from the rank assigned by respondents, from 5 for the risk the respondent ranked first, to 1 for the risk ranked fifth (all non-cited risks were assigned a score of zero). As a second step, for each economy the sum of points obtained by each risk across all responses from that economy was divided by the total of points distributed across all risks in the economy. The risk score thus obtained was used to establish a country-level ranking.
About Zurich Insurance Group
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With more than 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich's customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.
About the World Economic Forum
The World Economic Forum is an international institution committed to improving the state of the world through public-private cooperation in the spirit of global citizenship. It engages with business, political, academic and other leaders of society to shape global, regional and industry agendas. Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is independent, impartial and not tied to any interests. It cooperates closely with all leading international organizations (www.weforum.org).
For further information, please contact:
Sean McAllister
Head of Communications, Middle East
Zurich Insurance Group
Direct: +971 4 455 7552
Mobile: +971 56 175 3640
Email: sean.mcallister@zurich.com
Liam Turner / Tom Drummond
ASDA'A Burson-Marsteller
Dubai, UAE
Tel: +971 4 450 7600
Fax: +971 4 435 8040
Email: liam.turner@bm.com / tom.drummond@bm.com
© Press Release 2015
