Energy price shocks, fiscal crisis and spread of infectious diseases are among the biggest risks that concern businesses in the Middle East and North Africa (MENA), according to a new survey by the World Economic Forum (WEF).
The year 2020 has been challenging for oil-producing economies in the region. States in the Gulf Cooperation Council (GCC), in particular, have had to face a dual shock from the coronavirus pandemic and low oil prices. Months earlier, oil prices plummeted to negative territory, while global energy demand also collapsed, particularly during the coronavirus lockdown.
Besides energy price shocks, companies in the region are also worried about unmanageable inflation and cyberattacks, according to the WEF’s Regional Risks for Doing Business 2020 study.
The study included more than 12,000 responses from business leaders in 127 countries, including those in East Asia and the Pacific, Eurasia, Europe, Latin America, the Caribbean, MENA, North America, South Asia and sub-Saharan Africa.
Across the globe, unemployment emerged as the biggest concern among business executives, closely followed by infectious diseases and fiscal crisis.
Concerns about climate risks, such as natural catastrophes and biodiversity loss and ecosystem collapse also moved up the list of business leaders’ concerns.
Commenting on the results of the study, Peter Giger, group chief risk officer of Zurich Insurance Group, said that the pandemic is distracting businesses from certain long-term risks that will still be around long after the outbreak is over.
However, he added, the current crisis is also having the positive effect of leading many organisations to reassess their priorities.
“This, I hope, will ensure that businesses advance their risk resilience strategies and result in decisive and impactful action to combat existential risks like climate change,” said Giger.
According to John Doyle, president and chief executive officer of Marsh, the crisis has indeed shone a spotlight on organisation resilience.
“As firms look to the future, they are matching their risk and resilience arrangements with a threat landscape marked by significant customer and workforce behavioural shifts,” said Doyle.
“Just as economic and climate concerns will require firms to refocus business plans, a greater reliance on digital infrastructures will mean a marked increase in cyber risk exposures,” he added.
To optimise recovery, Doyle noted, organisations will need to build greater preparedness into their business models in order to be more resilient in the face of future disruptions.
In July, the International Monetary Fund (IMF) revised its earlier forecast for the region, citing that MENA economies are likely to contract by 5.7 percent in 2020, not 3.3 percent.
The IMF also reduced its forecast for the world economy, which it said will contract by 4.9 percent, not 3 percent.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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