The seven biggest risks to your business right now

By on July 28, 2014

Running an international business? Charles Hecker lists the 7 things you need to look out for.

1. Geopolitical instability

Companies care less and less about borders. Countries care more and more. The result is a level of geopolitical instability hitting hard at how companies and countries interact. US and EU sanctions against Russia are punishment for one country’s violation of another’s borders. A feverish business lobby prevented the deployment of the most trenchant sanctions, but in the end, politics trumped commerce.

2. Hacking

The ongoing digitisation of information makes cyber threats one of the most prominent new risks to business. The cyber threat comes in three equally pernicious forms. Firstly, attacks designed to access valuable or confidential information. Secondly, the ideologically or politically motivated attacks against a company’s reputation or its ability to provide services. Finally, electronic penetration by foreign agents for the purpose of commercial espionage.

3. Changes in the way we use energy

The emergence of alternative sources of oil and gas is redrawing the world’s energy map. Soon, shale will make the United States the world’s largest energy exporter. The US’s resurgent position threatens to upend political and economic relationships that have been stable for decades.

4. Corruption laws

You’re already worried about international corruption prosecutions. Now worry about local corruption laws. Local laws can be much more difficult to understand than international laws, and their prosecution can be much more difficult to predict. The areas of focus remain familiar – know your distributors, agents and other third parties. Worry about corrupt public officials, but don’t take your eye off B2B corruption.

5. The end of growth in emerging markets

Slowing emerging market growth threatens the orgy of consumerism keeping the new middle class happy. And once the shopping stops, how happy are we? The past 10 years has seen the development of a new, global middle class that has been content to keep incumbents in office as long as the good times roll. Now that slowdowns loom – particularly in emerging markets – incumbents are under pressure to justify their existence.

6. A power vacuum

If the US doesn’t want to be the world’s sheriff and no one else fancies the job, who’s in control? The United States has retreated from the Middle East, Afghanistan and Iraq, and US public sentiment is strongly against significant foreign interventions elsewhere. So who’s up for the job? The United Nations Security Council is hobbled by its members’ right to veto. China appears reluctant, as well as currently unable, to replace the US as the world’s chief cop. (Perhaps that’s a good thing.) The European Union’s consensus-driven model almost disqualifies it as an efficient global crisis manager. We are accustomed now to talking about a multi-polar world. At its core is a power vacuum.

7. The youth boom

Finally, you’re not getting any younger, but everybody else is. The global explosion of the youth population presents risks and opportunities. Countries with growing youth populations have a source of labour, consumption, ideas and investment. But any lapse in a country’s ability to keep its youth educated, employed, healthy and housed will lead to a challenge to the status quo. Africa is an excellent example of an entire continent undergoing a youth boom. It is also home to the majority of the world’s least competitive economies. Growth rates in Africa have been impressive lately. They will have to stay that way to absorb the continent’s bumper crop of youth.

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