“Political Instability and Social Unrest” Are Among The Main Risks for Entrepreneurs and Companies in 2023

 Companies From All Places Will Face A Series Of Progressive Risks When They Start The Year 2023. However, Risk Management Can Help Prepare Companies And Mitigate Unnecessary Disruptions. This Is The Message From Control Risks When Launching Its RiskMap For 2023, Highlighting Five Key Risk Categories For The Coming Year.

“The Risks To Companies Are: Political, Security, Cyber, Operational, And Regulatory, Which Are The Selected For This Year’s RiskMap,” Comments Oliver Wack, Partner And Regional Director At Control Risks For Colombia. “Last Year We Also Selected Terrorism As A Separate Area Of Focus, But The Taliban’s Expansion Was Completely Overshadowed By A Giant Escalation Of Hostilities Between Russia And Ukraine, Which Has Escalated Risk, Uncertainty, And Volatility Across Almost All Areas Of Our RiskMap.”

“Coupled With The Tensions Between China And Its Neighbors, We Observed That Geopolitical Risk Has Returned To The Forefront In 2023,” Explains Oliver Wack. The Launch Of Control Risks’ 2023 RiskMap, Which Took Place On November 16, Came With A Series Of Virtual Roundtables And Focused On Three Specific Regions: Americas, Asia-Pacific, And EMEA.

“During 2022, When We Highlighted The Risks Involving Cyber, Climate Change, Geopolitics, And Terrorism, We Felt The World Was Still In A Transition Period From The Peak Of The Pandemic, And It Was Not Clear Which Direction Things Would Take In Each Of These Areas,” Wack Continues. “Well, We Definitely Saw A Lot Of Escalation In 2022, And It Doesn’t Seem That Things Will Slow Down As We Enter 2023,” He Adds.

Recomendado para você

Oil and Gas

Major Oil, Gas, and Energy Event Will Take Place in Brazil: Macaé Energy Will Gather Petrobras, Equinor, Prio, Among Other Suppliers and Energy Executives for Business, Networking, and Employment Opportunities

The Technical Agenda and the Fair in the City of Macaé Should Boost Discussions on Investments, Energy Transition, and Development of the Oil, Gas, and Energy Chain in the National...

Paulo Nogueira

1

 Geopolitical Risk For Businesses And Economy – Challenge, Dissociation, And Deconfliction In The US-China Relation

These Three “D’s” Will Dictate The Risk Landscape For The Coming Year, According To The RiskMap 2023 From Control Risks. While The OngoingRussia And Ukraine Conflict Continues To Present High Geopolitical And Security Risks, The US-China Conflict Is Also Not Expected To Ease Anytime Soon.

“Direct US-China Conflict Remains Highly Unlikely In 2023, But Competition And Confrontation Are Moving From Trade And Technology To Military Domination,” Comments Oliver Wack. “Apart From Active Conflict, Companies In 2023 Must Monitor Joint Efforts To Dissociate Critical Supply Chains, Which Will Only Accelerate As China And The US Absorb And Interpret The Lessons From The Ukraine Conflict.”

However, The Increase In Bilateral Tensions Will Not Affect All Companies Equally. Those In Strategic And High-Tech Sectors Operating Or Doing Business With Both Countries Will Face Rising Political Risks.

 Meanwhile, For Many Companies In Less Sensitive Sectors, Business Will Continue To Operate Under Normal Conditions. There Are Also Opportunities For Strategically Located Companies, As The US Promises To Re-shore, Nearshore, And “Friend-shore” Strategic Industries Such As Semiconductors, Electric Vehicle Batteries, And Critical Minerals.

 Security Risk – War And Everything It Brings

 A Major Conflict Involving Nuclear Powers Has Completely Shaken The International Security Risk Landscape For 2023 Compared To 2022. This Will Continue To Influence All Security Assessments For The Coming Year.

“Assumptions About Pillars Like Globalized Markets And Supply Chains Have Been Severely Tested Recently By Populist Policies, Trade Wars, And Pandemics,” Says Oliver Wack, Adding That: “Few Organizations Seriously Considered The Risk Of A Major Regional Conflict In Europe Or East Asia. In 2023, War, Or The Prospect Of War, Across Various Timelines And Triggers, Must Be At The Top Of Everyone’s Risk Register.”

While The Overflowing Of The Ukraine-Russia War Remains Possible, Including The Increased Tensions In The Balkans, The Baltic States, And Post-Soviet Central Asia, The Renewed Specter Of Nuclear Conflict Will Also Illuminate Other Conflict Points Like Israel-Iran And India-Pakistan.

“As The Ukraine War Starkly Reminded Us, Local Or Regional Conflict Points Can Have Global Impacts, Therefore Supply Chains And Market Strategies Cannot Be Developed In Isolation From Geopolitical Scenarios,” Explains Wack.

Identifying, Preparing, And Monitoring These Scenarios Should Be An Integral Part Of Companies’ Strategic Planning And Decision-Making Processes, Not Just A Matter For Localized And Reactive Crisis Management.

 Cyber Risk – The End Of Global Networks Is Coming

In 2023, Companies Can Expect The Emergence Of A Fundamental Collapse Of Global Cyber Networks Into Distinct Regional Or Even National Architectures, Caused By The Weaponization Of Cyberspace And A Clash Of National Interests.

Meanwhile, Estimates Suggest That Over 60% Of Global GDP Will Be Digitalized In 2023. “As Investments In Technology Increase Across Sectors, The Principles And Assets That Govern Cyberspace Are Wearing Thin,” Comments Oliver Wack. “The Discussions About Web 3.0 Or The Metaverse Will Continue To Spread Across Boardrooms, But The Reality Will Be Very Different.”

Next Year, More Than 75% Of The Global Population Will Be Covered By At Least One Data Privacy Regulation. This Harsh Reality, Combined With Sanctions On Specific Technologies Or Suppliers, Means That The Illusion Of A Truly Global Cyberspace Is Rapidly Disappearing.

For Companies Seeking Opportunities In The Cyber Sphere During 2023 And Beyond, Control Risks Points Out The Need To Invest In And Develop Decentralized Digital Environments That Will Provide Greater Agility, Security, And Resilience To Those Who Adopt Them.

 Operational Risk – Managing While Adapting: Surviving Power Disruption

Managing Power Disruption While Seeking Adaptation Will Be The Main Operational Risk That Companies And Governments Will Face In 2023.

“Energy Has Returned As The Main Driver Of Global Disruption, But We Are Not Experiencing Just A Geopolitical Event,” Comments Wack. “This Will Be A Permanent And Systemic Shift. There Will Be No Return To A Pre-2022 Stability.”

The World Has Changed, And Companies Must Plan Not Only For Surviving The Shock Of Prices And Short-Term Supply, But Also For Thriving In A Totally Connected New Global Energy System.

However, The Energy Crisis Brings With It New Opportunities For Renewable Energies, Which Can Provide An Important Source Of Stability And Long-Term Predictability For Companies.

 From A New Generation Of Nuclear Energy To Hydrogen And Major Advances In Battery Technologies, The Energy Transition Must Lead The World In Innovation. Therefore, It Is Important That Renewable Energies Remain At The Center Of Companies’ Operational Planning For 2023, As They Become More Economical Than Unsustainable Alternatives.

 Regulatory Risk – Economic Headwinds Bring Regulatory Turbulence

 If The Operational Risk Of 2022 Can Be Summed Up By Shock, Inflation, And Disruption, Then Austerity, Scarcity, And Conflict Will Set The Tone In 2023. For Companies, This Will Mean A Disruptive Combination Of State Interventionism, Political Unpredictability, And Intense Government Scrutiny.

“Our Main Regulatory Risk For The Year Is The Turbulence Caused By Government Responses To Tougher Economic Conditions And Greater Fiscal Fragility,” Explains Oliver Wack. “Governments Around The World Will Target Revenue And Strive To Maintain Stable Finances. Wherever They Turn, The Corporate World Will Feel The Heat One Way Or Another.”

What This Means For Companies Is That They Must Keep An Eye On Geopolitical Stability And The Domestic Politics Of The Countries Where They Operate, In Addition To Observing Various Interconnected Factors Such As Popularity And Competence Of The Government, Rising Populism, Economic Conditions, Food Security, And Energy Security Scarcity.

 All Of These Factors And Others Will Drive The Nature, Tone, And Objectives Of Individual Government Policy Moves As Well As Reactions To Them.

“Expect Resistance To Regulatory Complexity Beyond Turbulence, Including Political Instability And Social Unrest,” Concludes Wack.