The forecast comes in Control Risks’ annual RiskMap, a political and security risk forecast for business leaders and policy makers across the world, published today.
Richard Fenning, CEO of Control Risks, said: “In 2019, what started as a trade war will ultimately harden into a more permanent stance. The confrontation on trade between the United States and China will become the defining geopolitical dynamic.
“This antagonistic relationship will complicate life not only for businesses in China and the US. Companies in a wide orbit around this stand-off will feel the political and economic impact,” added Fenning.
Top Five Risks for 2019
The assessment of the US China dynamic tops Control Risks’ list of Top Five Risks for business in 2019. In data governance and post Midterm politics respectively, Chinese and American dynamics inform the top tiers of the 2019 forecast.
The risks posed to business by extreme weather sees climate change push its way on the list for the first time.
The continuing surge of nationalist politics across the globe means that the Top Five Risks are rounded off by the prospect of globalised companies finding themselves increasingly nationless.
- US–China trade rift foretells a new global order
The confrontation on trade between the United States and China will become the defining geopolitical dynamic of 2019. This antagonistic relationship will complicate life not only for businesses in China and the US. Companies in a wide orbit around this stand-off will feel the political and economic impact. In 2019, what started as a trade war will ultimately harden into a more permanent stance. A US “contain China” policy could become one of the pillars of a new global order. - The global data switchback ride
The stand-off between the three domains of data regulation will present a new level of risk for the international business in 2019. For China, data is something to be controlled; for the EU, data is something to be protected; the United States sees data as something to be commercialised. Brace for the challenge of collecting, storing and transferring data within and between these three domains against a backdrop of inconsistent enforcement and escalating cyber security threats. - American political gridlock
The vice of legislative gridlock will close on policy making in Washington and throw the US into a period of pitched political uncertainty. Resurgent Democrats in the House of Representatives will seek to pin the President under an investigative lens. Pushback from a Republican Senate and White House will erase any hopes of consistency for business. Trade policy will remain unchanged; the pace of deregulation will slow. Foreign policy will remain unsettled and ambivalent in a global environment that requires clarity and resolve. - Extreme weather disruption
Some of 2019’s worst business disruptions will not come from terrorist attacks but from extreme weather and its consequences. From storms to floods to droughts and forest fires, the costs of interrupted production, distribution, sales and travel will skyrocket in 2019. Last year’s record for weather-related insurance claims will likely be surpassed. Extreme weather and all it brings have never been more significant as a business risk. - Multinationals becoming nationless
As globalised companies enter 2019, they risk – ironically – becoming nationless as nationalist politics continue to advance across the world. Formal and informal barriers are rising. Frictionless trade is beginning to rub, supply chains are starting to drag. Business leaders must re-calibrate and adapt to this new reality or global players will end up being played by a world in uncertain transition.
The new reality and the new resilience
RiskMap 2019 explains a world that is in the heat of transition towards a new world order. Businesses will have to develop a new type of resilience to survive.
“International businesses in 2019 will mourn the post-war liberal consensus because it was demonstrably good – for them,” said Steve Wilford, Senior Partner at Control Risks.
“Since the end of the Cold War multinationals massively increased their share of the global economy and now dominate global trade. They often maintain traditional national associations but are predominantly foreign when it comes to assets and employees. Nationalist policies will see this model come under intense pressure in 2019,” added Wilford.
Outsized opportunities for the resilient business in 2019
Nearly all businesses with international operations and supply chains in 2019 will find themselves ring-side in the battle for the next world order. The biggest players are already in the ring, ranking alongside nations in influence and exposure.
“From the broad swath of the global industrial sector impacted by the Made in China 2025 strategy, to the numerous internationals whose relationship with the US Trade Representative has changed from promotion to protection, the need to play coordinated defence against macro political opponents has never felt so real,” said Dan Tawfik, Principal at Control Risks.
“As with any dramatic change, outsized opportunities will inevitably emerge in 2019, and risk taking will be extraordinarily worthwhile for the brave,” added Tawfik.
The RiskMap 2019 website will be live from Tuesday 11 December 2018. The world map with countries‘ political and security risk forecasts will be available here http://www.controlrisks.com/
Note to Editors:
About Control Risks
Control Risks is a specialist global risk consultancy that helps to create secure, compliant and resilient organisations in an age of ever-changing risk. Working across disciplines, technologies and geographies, everything we do is based on our belief that taking risks is essential to our clients’ success. We provide our clients with the insight to focus resources and ensure they are prepared to resolve the issues and crises that occur in any ambitious global organisation. We go beyond problem-solving and provide the insight and intelligence needed to realise opportunities and grow.
