Dubai
Fiscal crises were ranked as the number one concern for the year ahead by business leaders in the Middle East and North Africa (MENA), according to a report released on Wednesday by the World Economic Forum (WEF).
The organisation defines fiscal crises in key economies as “excessive debt burdens that generate sovereign debt crises and/or liquidity crises.”
The report, released every January to share the perspectives of global experts and decision makers on the most significant risks that face the world, identified an energy price shock and underemployment as the second and third greatest threats to business in 2018 in the MENA region.
In its annual Global Risks Perception Survey (GRPS), WEF suggested that experts were preparing for another year of heightened risk. Asking nearly 1,000 respondents around the world for their views about the trajectory of risks in 2018, 59 per cent of their answers pointed to an intensification of risks, compared with 7 per cent pointing to declining risks.
A deteriorating geopolitical landscape is partly to blame for the pessimistic outlook in 2018, with 93 per cent of respondents saying they expect political or economic confrontations between major powers to worsen and nearly 80 per cent expecting an increase in risks associated with war involving major powers.
This is reflected in regional responses to the survey, with the fourth and fifth greatest concerns to businesspeople in the MENA region terrorism and interstate conflict.
In September 2017, WEF released a country-specific report, which listed the threat of cyberattacks as the greatest concern to businesses in the UAE, according to a survey of local executives.
John Drzik, president of global risk and digital at Marsh, who sponsored the report, said: “Geopolitical friction is contributing to a surge in the scale and sophistication of cyber-attacks. At the same time cyber exposure is growing as firms are becoming more dependent on technology. While cyber risk management is improving, business and government need to invest far more in resilience efforts if we are to prevent the same bulging ‘protection’ gap between economic and insured losses that we see for natural catastrophes.”
According to experts, however, as in 2017, the environment was by far the greatest concern raised.
Among the 30 global risks the experts were asked to prioritise in terms of likelihood and impact, all five environmental risks — extreme weather; biodiversity loss and ecosystem collapse; major natural disasters; man-made environmental disasters; and failure of climate change mitigation and adaptation — were ranked highly on both dimensions.
Extreme weather events were seen as the single most prominent risk.
It’s not all bad news, however.
The report noted that the prospect of strong economic growth in 2018 would present leaders with a golden opportunity to address signs of severe weakness in many of the complex systems that underpin our world, such as societies, economies, international relations and the environment.
“A widening economic recovery presents us with an opportunity that we cannot afford to squander, to tackle the fractures that we have allowed to weaken the world’s institutions, societies and environment. We must take seriously the risk of a global systems breakdown. Together we have the resources and the new scientific and technological knowledge to prevent this. Above all, the challenge is to find the will and momentum to work together for a shared future,” said Professor Klaus Schwab, founder and executive chairman at WEF.
