The United Kingdom-based Control Risks, a specialist global risk consultancy has announced the Top 5 Risks for Business in 2021, with a world with Covid-19 coming first on the list.
Control Risks believes that in 2021, the business will face a globally fragmented recovery from COVID-19; and now is the time to embrace risk and focus on the rebound as there will be emerging digital threats.
“There’s no doubt that businesses will continue to face considerable disruption from the COVID-19 pandemic, but we believe that the opportunities are real and exciting for many companies in 2021,” comments Control Risks CEO, Nick Allan.
It noted that all top 5 global risks are present in Africa but play out in unique ways. In some areas, the continent presents a positive break from the more negative global trends, such as in the regional cooperation shown by the continent in its response to Covid-19 and the planned launch of the African Continental Free Trade Area (ACFTA).
Other global risks for businesses in 2021 are US-China: stabilisation without normalization, Go green or go bust, Digital acceleration hits emerging threats and Missing the Rebound.
The global Top 5 Risks for Business in 2020 are highlighted below:
- A world with long COVID: 2021 will be a year of uneven recovery as vaccine rollouts create a world of haves and have-nots, with pockets of forever COVID at the bottom of the pecking order. Much of Africa, unfortunately, will be in the have-not category and companies will face prolonged operational uncertainty as localised restrictions are sporadically imposed in response to virus spikes. Africa’s economic recovery will also be more gradual, as governments with limited fiscal headroom cannot engage in sustained stimulus spending and must instead rely on under-developed private sectors to drive their recoveries.
- US-China: stabilisation without normalisation: While 2021 should see superficial stabilisation in the US-China relationship, the straining of the international rules-based system seen over the past few years will not go into full reverse. Competition rather than cooperation will remain the norm in international relations. In this regard at least Africa represents a welcome break from global trends, as 1 January will see the launch of ACFTA, and although full implementation of a continental free trade area will be slow the fact that Africa is moving in that direction when much of the world is not should be attractive to potential investors.
- Go green or go bust: An inflection point is coming for the relationship between businesses and climate change in 2021. No organisation can now afford not to take a stance. The environment is a critical aspect in a broader area of the ESG agenda. Although no African country bar South Africa has made a net zero pledge to date – without special funding, governments do not view it as a priority – the continent nonetheless has huge renewable energy potential. Renewable energy projects connected to microgrids make sense in a continent of small population centres spread over huge areas, and the recent liberalisation of energy markets in many countries has opened up multiple opportunities for private-sector investors. Without government backing, however, investors may ignore these opportunities for the subsidies and support on offer elsewhere.
- Digital acceleration hits emerging threats: The remarkable increase in connectivity across Africa – in mobile phone penetration, internet penetration, social media use and data traffic flows – has opened up a vast array of new opportunities. This is evidenced by the rapid growth in the African tech sector over the past few years. But this connectivity also brings risks. Cybercrime has boomed across Africa, from simple scams to sophisticated attacks on critical infrastructure. Criminal and state actors have also engaged in influence operations, spreading misinformation and inflammatory content that poses reputational risks to companies as well as political players. Companies in Africa, just like the rest of the world, will have to balance the drive for technological innovation with security, integrity and resilience challenges.
- Missing the Rebound: The coming year will see strong GDP growth in multiple markets, the roll-out of vaccines and a world hungry to start living again. While progress will be faltering, an uplift is coming – do not miss the rebound. If 2020 was about survival for many companies, 2021 is the time to focus on opportunity. Under the duress of COVID-19 many companies have flexed, not broken. Through innovation, rapid technology adoption and streamlining, they have emerged stronger, while weaker competitors have fallen. Those companies that turn the efficiency gains of 2020 into productivity gains, continue to accurately assess trends and show flexibility in adapting their operations will benefit from the coming surge in demand.
“Governance, policy consistency and rule of law are critical for investors in Africa and deep-rooted challenges remain across the continent in this realm, however, we do see positive change across the region. Recovery will be an opportunity for governments to address structural constraints and promote new approaches & technologies – the region remains front and centre for many of our clients. For Control Risks, Africa sits at the heart of our past, present, and future – we continue to invest and see growth across the region” explains Tom Griffin, Partner – Africa and the Middle East, Control Risks.
