Risk managers face 'escalating' integrity, security and political risks

Businesses should focus on “weathering” the global economic slowdown of the next 12 months and position themselves for a recovery after 2016.

That is the sage advice from the Control Risks Riskmap Report 2016, released this week, which forecasts the top political and security risk issues likely to affect large businesses this year.

The report suggests that 2016 will be challenging for businesses, as they are forced to navigate escalating integrity, security and political risks.

China’s slowing economic growth is one of the key concerns, as is a continued drop of commodity prices, an emerging markets’ debt crisis, a spike in terrorism and geopolitical events, state-sponsored cyber attacks, and a break-up of the European Union.

Control Risks global risk analysis director Jonathan Wood said China’s 2015 growth of 6% is likely to be a “new normal”.

“China’s share of the global economy has increased by nine-fold since 1980. But over the last 12 months we’ve seen a sustained and steep decline in China’s growth; it’s below 7% for the first time in 25 years,” he said. “The decline in Chinese growth is having significant impact on global prospects.”

But it’s not all bad news.

“China has relatively strong growth fundamentals. Remember, 6% [annual growth in] China in 2015 is much more significant than 14% or 15% [growth] China 10 years ago,” Wood said.

The ‘Made in China 2025’ initiative may also be cause for concern, which is expected to see the introduction of regulation that prohibits foreign companies from being market leaders in certain industries or sectors.

Control Risks predicts that an international firm operating in China will not be considered a ‘local’ player if they have a majority share in a local joint venture.