Join forces or perish

A lack of collective will to tackle some of the globe’s biggest risks will plague businesses in 2019, according to the latest World Economic Forum report. 

The divisive geopolitical landscape of ”strongly state-centred politics” that was identified in the 2018 report continues to be of significant concern. 

”The idea of “taking back control”— whether domestically from political rivals or externally from multilateral or supranational organizations— resonates across many countries and many issues. The energy now expended on consolidating or recovering national control risks weakening collective responses to emerging global challenges. We are drifting deeper into global problems from which we will struggle to extricate ourselves,” said the report. 

Marsh CEO, Pacific, Scott Leney, said: ”Understanding risk at a global level is important for businesses of all sizes in Australia. Trends and predictions on risk issues help us anticipate events that could impact our organisations and prepare ourselves to mitigate or find risk financing solutions for them.

”In 2019, these issues include addressing the human impact of global risks, technological vulnerabilities, environmental risks and geopolitical and geo-economic tensions.”

There are three macro takeaways for Australian businesses from the 2019 global risks report:

1. Businesses should be proactive in identifying potential sources of business disruption in their organisation and initiate or continue senior level conversations on how to best mitigate those risks.

2. Risk response is as important as risk prevention and firms should focus on how to respond to fast moving events with a high degree of uncertainty.

3. Consider geographic shifts in risk and how this might change strategies relating to investment decisions or supply chains.

Zurich Financial Services Australia, chief underwriting officer, Sean Walker, said: “For the third year running environmental risks have dominated the report, which is no surprise in a year that’s been characterised by bushfires, heatwaves and flooding.

”This week heat records have been broken in Western Australia, New South Wales and South Australia, and if these conditions persist there will undoubtedly be an impact on business. Australian businesses should be building climate change resilience and adaptation strategies into their broader business plans. These plans need to be real and tangible, not treated as some ‘horizon 3’ or ‘Black Swan’ conceptual event but as something to be addressed as part of a new operating environment.”