Risks of Doing Business in 2014

Image: Sameer Pawar

Global business risk consultancy firm Control Risks has published its annual RiskMap for policy makers and business leaders, plotting trends over the coming year. The map highlights global trends that will become increasingly important.

Protectionism: The hunt for growth in 2013 has provoked a new wave of trade protectionism. The manner in which countries counter slowing growth will be critical to the political risk landscape.

Middle class: Over the last 10 years, the global middle class grew to over two billion people and is projected to expand to over three billion by 2023. The Arab Spring, Occupy and Indignados movements have shown expectations for better opportunities. Companies, and governments, will be scrutinised on environmental grounds, indigenous rights, workplace safety and economic justice.

Nationalism: Company nationality will play an important role in political risk as strategic interests evolve. The US’ move to become energy independent, China’s imperatives in sub-Saharan Africa, and the growing food needs of water-scarce but cash-rich Middle East are some of the factors in this geopolitical landscape.

Control Risks also identified factors that will be cause for concern.

In Europe: The Eurozone’s problems, intensified by efforts to demonstrate recovery, will leave it inward-looking in 2014. In Eastern Europe, middle-class ambitions to enjoy political freedom could result in resurgence of protests.

In Asia-Pacific: Foreign companies in China will come under continued scrutiny, leaving companies and investors vulnerable. India will continue to disappoint investors despite its potential; 2014 polls are unlikely to produce a strong government to tackle issues undermining growth.