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A broader view of business risk

At the time of writing this column, we are nearly finished putting the finishing touches on the February 2009 edition of Hi-Tech Security Solutions; Barack Obama has just been crowned, I mean inaugurated and in the midst of crumbling economies there is a hint of belief in the miraculous. As a business journalist from a TV news station noted, the world is waiting for fairy dust to solve all the problems instantly.

Those in the security industry know that nothing happens instantly, instead, it takes planning, effort and a lot of work. In this month’s commercial sector focus we have two articles looking at the risks ahead for South African businesses; one article looks at business risks, the other at business continuity dangers.

Although all the usual 'what is in store for 2009' articles have been done, perhaps it is a good idea to look further than the local market and consider what the risks are internationally; many South African companies are expanding beyond the borders and will need to be aware of different security issues in other parts of the world. In the online edition of CSO magazine there was recently an article titled '3 Global Risks to Business in 2009'. The article was a report from Control Risks, a specialist risk consultancy.

Of the issues the article raised, only one was a concern we in South Africa are already facing: the financial crisis. Apart from the obvious implications of declines in growth and investment, there is also the stability issue to consider. Companies used to operating in Africa are probably used to doing their homework in this regard, but assuming you will find a stable government and the rule of law is not a safe assumption in many more countries around the globe than was previously the case. There are no countries that will miss the recession, with some suffering very serious setbacks.

The second issue raised was scarcity. While the oil, steel and generally all commodity producers were printing money over the last few years, prices have plummeted. It is difficult to feel sorry for these companies after their record profits, but they are feeling the pinch and we can expect soaring prices when the global economy picks up again due to reduced production.

Scarcity will be seen in other areas, especially in Third World countries where electricity will be unreliable (it is not only in South Africa) and food and safe water will also be more expensive and, in worst cases, hard to find. With less money around, providing healthcare to the poor will also be harder than ever. There are the obvious social consequences to these issues.

This is only the tip of the iceberg, but is a timeous warning to those in authority. Even in stable countries, job losses and scarcity could lead to demonstrations, which could turn violent and even spill over into xenophobic attacks.

The third issue CSO raised was something not overly common in South Africa to date, kidnapping and piracy. No longer confined to Latin America or Somalia, these issues seem an easier way to make money for some and will require more attention from authorities. In terms of kidnapping especially, countries with weak law enforcement could be in line for a new scourge of lawlessness. As far as piracy goes, it is still primarily located near Somali waters, but a weak navy could serve as an attraction.

2009 will be a year of increased risks in almost every aspect of business: staffing, expansion, investment, credit, social unrest and everyone’s favourite, skills. The environment will not change anytime soon so it is up to business to mitigate its risks, do its homework and plan carefully. However, South African businesses also know that opportunities abound in changing societies. A changing world means danger, but there are also opportunities to be grabbed.

Andrew Seldon

Editor

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