Unpredictable political leadership poses biggest risk in 2018, forecast says

Cyber attacks against infrastructure and growing political tensions between nations like the US and North Korea are threatening to “trigger shockwaves” across the globe and destabilise business confidence, according to an annual forecast.

Specialist risk consultancy, Control Risks, has published its annual RiskMap which aims to provide an important reference for political and business leaders. Regional rivalries in the Middle East and unpredictable world leaders, including the likes of US president Donald Trump and North Korean leader Kim Jong-un are among the biggest threats to stifling positive economic outlooks which have been generated since the end of the financial crisis, says the latest forecast.

Closer to home in the UK, businesses exposed to Europe will have to step-up their scenario-based contingency planning and continental Europeans trading with the UK will need to add urgency to their trading options review, according to Control Risks. Despite the EU returning to growth, the consultancy believe the EU's economy could be challenged by ongoing nationalism within member states.

Richard Fenning, chief executive of Control Risks, said: “Despite the most positive global economic outlook since the end of the financial crisis, we are entering a year of geo-political fragility that has the potential to trigger shockwaves to global stability and business confidence. The biggest risk is that the next world order will be imposed, not agreed, set-off by further nuclear brinksmanship between the US and North Korea, or wide scale destabilisation in the Middle East because of escalating Iran-Saudi Arabia rivalry. While these events are unlikely, what is certain is that global dynamics and perceptions of risk are being shaped by a more robust, personalised and unpredictable style of political leadership in many parts of the world, making business planning very difficult.”

The top five challenges to businesses in 2018 according to the Control Risks report are:

  1. North Korea escalation - war on the Korean Peninsula is said to be unlikely, but risks of miscalculation and accidental escalation are the highest they’ve been since North Korean leader Kim Jong-un assumed power.
  2. Large-scale cyber attacks against infrastructure - Control Risks say 2018 could see large cyber attacks to build on 2017 being hit with numerous disruptive attacks. National infrastructure systems are particularly thought to be at risk.
  3. US protectionism - while unlikely to occur, the risk consultancy claims that the threat is there of Trump pulling the US out of the North American Free Trade Agreement and the World Trade Organisation.
  4. Regional rivalries in the Middle East - the Saudi Arabia and Iran rivalry is set to "inform and inflame conflicts and enmities in Syria, Lebanon, Iraq and Yemen".
  5. Personalised leadership - the growing number of assertive world leaders who rely heavily on nationalism is highlighted as another risk.

Click here to view the 2018 RiskMap.

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