LONDON—Businesses in 2018 will face profound uncertainty because of the increasingly personalised and assertive style of national leaders whose decisions are hard to predict, according to a report from U.K.-based global risk consultancy Control Risks.
“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,” says Richard Fenning, CEO of Control Risks.
The Top 5 Risks for 2018
North Korea escalation: War on the Korean peninsula is unlikely, but while the paths of escalation are clear, de-escalation is harder to plot. The search is on for the least bad option. The risks of miscalculation and accidental escalation are the highest they’ve been since North Korean leader Kim Jong-un assumed power.
Large-scale cyber attacks against infrastructure: 2017 was the year of major but random disruptive attacks. 2018 could see the likes of WannaCry, NotPetya and BadRabbit recur, but in a more powerful, targeted and disruptive manner. National infrastructure systems are particularly at risk.
US gets protectionist: Low likelihood, high impact, but the threat is there: in a year of mid-term elections, NAFTA negotiations fail to make enough headway, Donald Trump pulls the US out of NAFTA and the WTO, and goes after China on trade, causing profound disruption to international commerce.
Regional rivalries in the Middle East: Ambitious Saudi Arabia and assertive Iran will not go to war, but across the region their rivalry will inform and inflame conflicts and enmities in Syria, Lebanon, Iraq and Yemen and between Israel and the Palestinian Territories.
Personalised leadership: Astride the business risk landscape is a collection of assertive world leaders who rely heavily on nationalism and, to varying degrees, populism. Prone to capricious decision-making, they find foreign companies convenient targets. More than ever, knowing the mind of the person at the top is essential.