The World Economic Forum recently concluded a study on Risks of Doing Business in 2020. This year it was overwhelmingly clouded by the Corona pandemic. As the world goes through out of the ordinary situations, business leaders have had a daunting task of tackling the unexpected. As if the risks from business disruptions, innovations and political landscapes weren’t enough, they now have to worry about diseases & their impact on proceedings. And it is keeping them awake at nights.
Top Risks of Doing Business in 2020
The World Economic Forum conducted the survey this year between Jan & July. The leaders were asked to select the top five risks from the list of 30. They were asked to choose the biggest risk doing their business in countries they operate for the next 10 years.
The WEF study was done with the participation of over 12,000 business leaders from 128 countries. This year unemployment was seen as the toughest risk and the most hard pressing problem faced by businesses. 2020 has seen shutdowns that has affected life on the planet like never before. Several businesses had to face extended lockdowns and it has affected employment for several industries including travel & tourism, manufacturing & transportation etc.
Unemployment is the Top Concern
Unemployment or underemployment remains the concern of 34.5% business leaders. The scale of the corona pandemic coupled with the rising automation & AI is replacing human jobs. In the 2019 report, underemployment and unemployment was at the third spot with 28.5%.
Spread of infectious diseases was the next biggest concern with 32%. The rising cases of infections around the world has meant office spaces could be at a potential risk of infections. The spread of infectious diseases wasn’t among the top 10 in 2019’s list. But this year, it has risen to the second spot on the list & understandably so.
Fiscal crises is ranked third on the list of business risks this year. The 2020 year has seen major economic upheavals and distressed organisations. Fiscal crises was rated as a major business risk by 26.5% CEOs in 2020 compared to 28.9% in the preceding year. Last year it was at the top of the business risks perceived by the leaders. The Fiscal crises are marked by a financial, economic, technology, political as well as social dimensions. All these have been affected with uncertainties this year.
As companies are proliferating the usage of technology and digitisation. Most organisations are now providing their business services using softwares and services that deploy data on the cloud. The increasing threats of Cyberattacks is worrying for the business leaders. Cyberattacks were regarded as the major business risk by 26.1% CEOs this year. Theft of data, security breaches and malicious cyber attacks are something business leaders want to guard against. Cyberattacks were ranked second biggest business risk in 2019 with 28.2% share. This year it has been nudged to the fourth spot.
The fifth major business risk was profound social instability with 26.1% share. The uncertainties, political instability and risks have increased the social instability in the world. Many countries saw expatriates leave for their home countries. The US itself witnessed major controversies and protests against racial bias. Social instability has a huge economical and political impact. Profound social instability was rated as sixth top business risk in 2019 and received 23.5% responses. There has been a social unrest with the ongoing events around the world contributing to the increased business risk.
Balance of Power Shifting
The global businesses are also facing uncertainties with the disruptions brought about by the events this year. The world order has been affected due to the Covid-19 pandemic. Trade & governance have been impacted in a big way. As per IMF data & Bloomberg report, China has emerged stronger than ever before due to the pandemic. China & India will play a major role in global growth. The contribution of China in the worldwide GDP growth will increase from 26.8% in 2021 to 27.7% in 2025 & India’s contribution will increase from 10.2% in 2021 to 13% in 2025. China & India will be at the forefront of global GDP growth leaving behind all other economies.
Globalisation and trade across countries was also affected this year. Many businesses had a tough time to source goods and their supply chains were affected. The IMF forecasts world GDP to shrink 4.4% this year. The forecast for the next year is optimistic and growth is predicted to be 5.2%.
The global business leaders will have their work cut out as they charter unknown territories.
The rising inequalities, job losses and geopolitical issues will warrant all their ingenuities for creating a better future. There could be a silver lining with Covid-19 that it has given us a chance to reimagine things from the ground up, it has given us a break to think and build a more meaningful world for everyone around us.
