Risk Overview for 2019
2018 brought a slew of chaos across the world as governments and corporations saw distinctly the consequences of a globalized economic environment, where on region’s instability can carry wide-ranging effect across the world. Many have been quick to predict another global financial crisis in 2019, but economists agree that 2019 will be the most challenging year in recent history.
Organizational Readiness
Respondents to a survey, it listed digital readiness as their top concern in 2019, jumping frm the number ten spot in 2018. The demand for specialized digital knowledge and subject matter knowledge and skills have also caused succession challenges and challenges in attracting and retaining top talent. The report also outlined several top risks for 2019, including:
• Outdated operational and IT infrastructure has the potential to underperform when it comes to providing quality, competitive value, innovation, and time to market.
• Regulatory/structural changes that organisations could struggle to adjust to, affecting the delivery of products and services.
• The increase of cyberthreats disproportionate to how equipped organisations are to prevent, detect, or respond to them.
• Privacy and data management, including the capacity to leverage on Big Data for business intelligence.
• Inefficiencies in identifying and responding to risks in a timely manner, thus affecting strategic plans.
Slowing Global Growth and Southeast Asia
In 2017, economists predicted strong growth for Southeast Asia. For 2019, Bloomberg economists are wary in light of global events in 2018 with potential ripple or contagion effects.
Across the world, other wide-varying factors make predicting the economic outlook for the year difficult. These factors include slowing growth across Europe, political instability in countries such as India, Indonesia, South Africa as well as burgeoning housing bubbles in Germany, Australia, and Canada. This is not to mention the recent US government shutdown, which at the time of writing, is ongoing.
Global growth will be slowing down in 2019. In Southeast Asia, especially, expect to see a slowdown overall, thought the Philippines and Vietnam – who have been on the upswing – could remain resilient. The ongoing uncertainty surrounding tariffs in China will likely see its impact this year. Uncertainties surrounding election outcomes in Asia – particularly Thailand, Indonesia, and the Philippines – also have the potential of hurting investor sentiment.
Cybersecurity Risks
While cybersecurity has consistently been a high concern for organizations in recent years, poor governance and lack of focus in their IT functions have resulted in siloed systems ill-equipped to deal with cybercrime. The cost of damage from cyberattacks is expected to balloon to $6 trillion in 2021, and organisations should prioritise the optimisation of their processes, structures and capabilities in order to foster resilience.
Credit Risk
According to Moody’s Investors Service 2019 Outlook, with slower economic growth, credit risk is also expected to accumulate. Other factors include tightening liquidity, market volatility, and funding costs. The US-China relationship will also continue to shine a spotlight on globalisation and inequality their impacts on both the national and international levels. Governments and businesses have to adjust to the rapidly changing credit landscape, or suffer the consequences in 2020, where it is expected to have even weaker conditions.
Environmental Risks
The focus on geopolitical instability in media headlines and by economists should not obscure the very real dangers of looming environmental threats. There is an alarming trend of softening environmental policies worldwide – including Trump’s rolling back to US regulations on energy as well as the watered down green policies in the Brexit negotiations. In 2018, many of the most damaging weather events, from Califronia’s fires to Indonesia’s tsunami, have been linked to climate change. More now than ever, how corporations conduct their business have to take into account not only organizational sustainability but also environmental sustainability, as well as the integrity with which they approach their core operations.
Takeaway
With slowing global economic growth, among other risk factors, 2019 is set to be another challenging year. With internal conflicts as well as increasingly shaky international alliances, it’s yet to be seen whether world leaders are equipped to take the steps necessary to address the social, economic and political issues that are here to stay. All in all, the focus on geopolitical instability and burgeoning economic concerns, as well as the ever-rapid acceleration of technological innovation, will place greater pressure on businesses to adapt to less-than-ideal circumstances
