Allianz: Macroeconomic & political risks top concerns for corporates

A recent report by Allianz has shed light on the top risks facing businesses in Nigeria in 2023, with a focus on macroeconomic developments, political uncertainties, and cyber risks. The Allianz Risk Barometer has also pinpointed inflation as a major concern for businesses operating in the country. Niran Adeyemi, a Property and Casualty Insurance expert at Allianz, joined CNBC Africa to discuss the findings of the report and provide insights into the current business environment. A key theme that emerges from the report is the increasing unpredictability and complexity of the business landscape, fueled by events like the COVID-19 pandemic and geopolitical tensions such as the conflict between Ukraine and Russia. These unforeseen events have made it challenging for businesses to anticipate and mitigate risks effectively. However, Adeyemi noted that businesses have learned from past incidents and improved their business continuity management systems to better prepare for unexpected risks. Key Points: 1. Global Trends in Risk The Allianz Risk Barometer surveyed over 2,700 respondents from 94 countries and territories, highlighting cyber incidents as the top risk globally for businesses. This trend was consistent across regions such as Europe, Africa, and Asia. Business interruption and inflation were also cited as significant risks, with the energy crisis emerging as a new concern due to the ongoing conflict between Russia and Ukraine. The supply shortages and price fluctuations resulting from this crisis have further exacerbated inflationary pressures worldwide. 2. Top Risks in Nigeria In the Nigerian context, macroeconomic developments rank as the primary risk for businesses, followed by political uncertainties, especially in an election year. While cyber incidents have dropped to the third spot compared to the previous year, they remain a critical concern for Nigerian businesses. Adeyemi highlighted the proactive measures taken by businesses to enhance cybersecurity and implement robust business continuity plans. Additionally, the migration of skilled workers out of the country has been identified as a growing risk, impacting various industries in Nigeria. 3. Regulatory Challenges and Business Interruption The report also highlighted ongoing regulatory changes as a significant risk factor for businesses in Nigeria. Adeyemi discussed how evolving regulations, particularly in areas like ESG compliance and financial services, pose challenges for business owners. Business interruption due to supply chain disruptions, especially in the energy sector, continues to be a pressing issue for Nigerian businesses. Despite efforts to mitigate these risks, there is a recognition that unforeseen events could still impact business operations. Quote: Adeyemi commented, “For us in Nigeria, those risks that we identified in the past, they remain, although businesses have found a way to manage or prepare for them. But there's also the risk that some of these things might come up and become bigger in the future.” In conclusion, the Allianz report underscores the importance of risk management and resilience for businesses in Nigeria amid a challenging and dynamic environment. By addressing key areas such as cybersecurity, regulatory compliance, and business continuity, companies can better navigate the uncertainties and emerging risks that lie ahead.