In conversations with customers and partners at the year end we reviewed the challenges of the past few months, but also looked at the 2019 outlook. Particularly the expected economical risks stood in focus.
Most frequently mentioned topics (not considering probability and impact) were the following ones:
- Global Economy Decline
This most frequently mentioned topic considers not just the U.S. disputes with China, but also those with the European Union. Both controversies may significantly affect the worldwide continuous economic development. Also in focus: increase of economic sanctions and their effects.
- Development of Exchange Rates
Exchange rates of foreign currencies play an important role in companies with a high share of exports or imports. And the concerns are not just about the level of exchange rates – volatility causes even greater headaches, i.e. higher frequencies and amplitudes of fluctuation.
- United Kingdom and Gibraltar European Union membership referendum (BREXIT)
Are the political protagonists able to transfer the British vote into a mutually acceptable and hopefully beneficial arrangement for the citizens? If political power games outweigh consensus, an unregulated, hard exit from the EU would be possible – with considerable economic implications as a result, at least for the time until the individual open issues are resolved. The eruptive waves of a hard-Brexit could endanger not just the European business landscape, but the worldwide economic and political continuity and stability.
- Delivery Problems / Availability of Important Materials
Not just the Tech sector inhere severe dependencies on purchased materials or parts, which can only be obtained with considerable delays or even not at all from other known sources. If such suppliers experience problems in their own production, that may threaten the next level use business and continuing existence or even the end customers.
- Failure of Important Partner Companies
Just a different cause but the impact may be no less drastic than in the case mentioned above if a supplier, service provider or customer that can’t be replaced quick enough, would get into financial difficulties or change their product strategy, e.g., as a result of restructuring or due to the changes by a new owner or management.
- Your Own Company Reputation
In the ages of social media, an unfortunate line in the news, emerging of counterfeit or dangerous products, or unfavorable ratings in consumer reviews may cause storms of public outrage that could threaten the existence of the business, its customers and suppliers, and even damage regional and industry sector environment.
- Risks of Information Technology
There are concerns not only about third-party threats to critical infrastructures (e.g., hacking, DDOS attacks), but also increasing regulatory requirements (e.g., privacy, copyright) and the impact of new technical standards (e.g., 5G introduction).
- Debt Crisis of the EU
Greece’s financial problems are currently less dominant in the media. But many wonder when and where the next fire could break out – Italy has been mentioned several times lately. The political will to spend of taxpayers’ money with care and in relation with overall economy performance varies from country to country in he EU. And in terms of detecting and avoiding debt traps, the picture looks similar. Therefore, hidden Greek-style smoldering pockets of embers may flame up unexpectedly in several EU countries.
- Demand Based Manpower Availability
Uncertainties were mentioned surprisingly frequent in regards to the ability of finding professionally qualified and personally suitable employees (for certain new or even well-known technologies and tasks), or retain them in the company, and to ensure the continuing existence of the business.
- Industry Sector Specific Risks (e.g., regulatory allowances for products subject to authorization)
This type of risk is specific to automotive, to the medical sector, to aviation suppliers and in many other fields, each one in separate forms and characteristics. Common to them is a high dependence to obtain and maintain the required regulatory permissions for their individual target markets.
Are your very own Top 10 Business Risks for 2019 well recognized and firmly put under control?
If that`s not entirely sure, feel free to contact NoRisk@glorisol.com. For your inquiries and feedback our contact form is available as well. Glorisol will consult and work out practical ways to effectively treat your individual risk portfolio according to your specific needs.