The key risks facing Nigeria at this time in her history are a concern to businesses and organisations. The annual survey on global business risks from Allianz Global Corporate & Specialty (AGCS) show that changes in legislation, regulation are major concern for businesses.
Data breaches and privacy scandals, major IT outages and the introduction of tighter data protection rules in many countries are now a core concern for businesses in 2019 and beyond.
According to the Allianz Risk Barometer 2019, Cyber incidents(37 percent of responses) are neck-and-neck with Business interruption (BI) (37 percent of responses) as the top business risks globally.Climate change(#8 with 13 percent of responses) and Shortage of skilled workforce (#10 with 9 percent of responses) are the biggest climbers globally. At the same time companies are more worried year-on-year about changes in legislation and regulation (#4 with 27 percent of responses) resulting in impacts such as Brexit, trade wars and tariffs.
The annual survey incorporates the views of a record 2,415 experts from 86 countries including CEOs, risk managers, brokers and insurance experts
“Companies need to plan for a wide range of disruptive scenarios and triggers as this is where their big exposure lies in today’s networked society,” says Chris Fischer Hirs, CEO of AGCS. “Disruptive risks can be physical, such as fire or storms, or virtual such as an IT outage which can occur through malicious and accidental means. They can stem from their own operations but also from a company’s suppliers, customers or IT service providers. Whatever the trigger, the financial loss for companies following a standstill can be enormous. New risk management solutions, analytical tools and innovative partnerships can help to better understand and mitigate the modern myriad of business interruption risks and prevent losses before they occur.”
Leading risks in Nigeria
Changes in legislation and regulation are the top risk in Nigeria with 41 percent responses, up by 8 percent from the 2018 results. Market developments remains unchanged at #2 with 34 percent of responses. In 2018 theft, fraud and corruption was at#1 but has now dropped to #3 with 30 percent responses. Loss of reputation or brand value at #6 with 23 percent responses emerged as a new risk in the top 10.
2018 was a turning point for global trade, according to Ludovic Subran, chief economist of Euler Hermes and deputy chief economist of Allianz. US tariffs went up to 5.2 percent from 3.5 percent, bringing them back to the mid-80s and breaking with a history of preferring more sophisticated protectionism, such as regulation, over tariffs. Yet, the end-of-year trade truce with China is only postponing growing US China rivalry as the backdrop for multinationals in 2019. As multilateral institutions struggle for a second wind, the rules of the games will be different for companies according to their shareholders, their location or the market they are after.
While Nigeria is not immune from the US China trade war, the country also needs to ensure that the 2019 elections are free and fair. However, the country is a federation of states of varying size and economic power, encompassing a plethora of ethnic, tribal and religious groupings. These overlapping ethnic and religious identities are often in conflict with Nigeria’s federal system, as customary authority continues to play a crucial role in the country. Internal regional economic differences and endemic corruption pose ongoing threats to stability and inhibit effective policymaking. In particular, these threats are indicated through religious differences and disputed claims on oil resources. Disputes between state powers and indigenous groups (particularly in the oil-rich Niger delta) and the federal government over allocations of oil earnings have led to sharp divisions and lawlessness.
