We live in constantly challenging environments where, in order to face the challenges that arise, it is beneficial to take note of the context in which we operate. Otherwise, it is easy to get lost in the complicated roadmap that involves the growing need to acquire technological skills, rethink business units to tackle an eminently digital market, or take on the components linked to the unstoppable drive of the Customer Experience; which, moreover, are not isolated disciplines, but are interrelated, causing even more headaches for those who have to manage the pulse of a company.
That is why we turn our attention to the recently published report by the World Economic Forum (WEF) on regional risks for doing business, focusing particularly on the European case. The report is based on an exhaustive survey of 12,000 business leaders around the world, who are asked to assess and rank what they consider to be the greatest risks to economic development, competitiveness, and business generation.
In the WEF report, the full PDF version of which can be accessed via this link, the reference to Europe includes the 28 member countries of the European Union and nine other countries: Turkey and most of the Western Balkans. The first focus is on the risk of cyberattacks, because it is the greatest risk, although not consistently and coherently across the entire "region" studied. According to the WEF and its own data, this contrasts with concerns in other regions such as America and Asia, where it is clearly the main risk. This is relevant information if we take into account business disciplines such as competitive intelligence: positioning oneself as a leader in a field that is a subject of study and concern worldwide (cybersecurity) can be a business vector worth exploring while others are focused on problems that may be a thing of the past.
"Across the region, cyberattacksemerged as the main risk to doing business, largely as a result of their prominence in many of the region's most advanced economies," the report notes. Twelve economies cite this risk as the main one, but not always where we might imagine. Thus, while Germany and the United Kingdom put them in first place, for France and Italy, internal economic and financial conditions were more worrying.
It is no coincidence that cybersecurity is the primary concern in the United Kingdom and Germany. The major attacks recorded in 2017, such as the WannaCry ransomware, severely affected the UK healthcare system and the German rail system. The harder the blow, the more sensitive the memory seems to be.
However, French respondents cited "unemployment and underemployment" as the number one risk for doing business, and they elaborate on "long-standing structural problems in the labor market that successive governments have struggled to address." In Italy, the number one risk turned out to be "failure of the financial mechanism or institution." And they are not the only ones to mention this issue: in total, the "failure of the financial mechanism or institution" is ranked as one of the top five risks for businesses in 18 countries in the region, "suggesting significant residual post-crisis nervousness about the health of the country," the report notes.
"Another sign of post-crisis unease in Europe," it adds in its executive summary, is that the second-biggest risk at the European level is "asset bubbles." This is a particular concern in Central Europe, ranking first in the Czech Republic, Hungary, and Slovakia, and second in 12 other countries across the region, from Ireland to Cyprus. For the WEF, "the underlying driver of this widespread nervousness is likely to be found in the role played in Europe's post-crisis recovery by expansionary monetary policy, especially in the eurozone, where the European Central Bank's decision to begin large-scale asset purchases in 2015 marked a turning point for the bloc. The potential concern is that central bank bond purchases may have artificially inflated the value of assets in many classes, increasing the possibility of damaging corrections when, over time, monetary policy begins to tighten."
In this regard, the report cites something that we in Spain know well: the housing market. Although the Spanish case is not mentioned, figures are provided that give an idea of the situation at the European level: compared to a 4.5% annual decline in prices between 2008 and 2015, growth since then has averaged 13.7%, with spectacular rates in countries such as Hungary (39.5%), Latvia (33.1%), Ireland (32.1%), and Portugal (29.5%).
The document also describes as "surprising" that "failure of national governance" takes the bronze medal, because it is a risk detected in an environment of "relative level of development of most European countries." It is surprising that "failure of national governance" ranks first in four countries (Bosnia and Herzegovina, Croatia, Greece, and Lithuania) and second in four others (Malta, Portugal, Serbia, and the United Kingdom). It ranks first in four countries (Bosnia and Herzegovina, Croatia, Greece, and Lithuania) and second in four others (Malta, Portugal, Serbia, and the United Kingdom). "The result in the United Kingdom is particularly dramatic," the study adds: "A year ago, respondents rated this risk as their seventh most important concern. Its jump in the ranking now seems to align with widespread reports of the growing tensions that the process of leaving the EU is placing on UK political and governmental institutions."
The phenomenon of "political disruption" is not solely determined by Brexit, as "many countries in the region now have to adapt their patterns of government to a new electoral environment characterized by increased political fragmentation, polarization, and populism." Added to this is the issue of migration, which "is likely to remain a source of tension within and between countries in the region in the coming years." Although it only ranks ninth in the European ranking, it ranks second in Finland, Macedonia, and Romania, and third in Austria, the Czech Republic, Latvia, Norway, Sweden, and Switzerland. That is quite a few countries.
Where should Europe look to be competitive? Data from the World Economic Forum serves as a guide for competing beyond day-to-day operations. Be mindful of cybersecurity, be mindful of our assets, and be mindful of regulatory compliance: these can be obstacles, but they are not excuses for being companies of our time. The best way to ward off risk is to be aware that it exists and to operate accordingly, through foresight, analysis, and the wise allocation of resources.
Photo byHéctor MartínezonUnsplash
