eBusiness Weekly
Elgin Chetsanga
By the end of 2023 it was becoming clear that 2024 would be no ordinary year. The global events that unfolded in 2023 such as temperatures shattering records, tensions between world superpowers, conflict in Sudan, Middle East conflict, Russia-Ukraine military actions and the rise of Artificial Intelligence (AI) all set up the stage for a unique 2024.
Regionally and locally, there were also some major events which had a significant bearing on 2024.
It is incumbent for any business and business leaders to be alive to the key risks’ trends both in the local, regional and global economy.
It goes without saying that businesses that are proactive in environmental scanning are usually better prepared to deal with the consequences of incoming risks.
It has also become undoubtable that in this globalised village what happens in one corner of the world will influence events in another corner. In this modern age, we no longer think in silos because the level of insulation from global shocks risk events has been greatly reduced due to interdependencies.
According to a recent World Economic Forum article, the world is operating in the age of the polycrisis. The term polycrisis was coined in the 1970s and has come to be understood to describe the coming together of various crises.
The global economy is indeed faced with multiple crises some which are carry overs from 2023. These risks can either be known risks such as the climate change as well as unknown ones which take us by surprise. Below we explore a few risks which the typical Zimbabwean business should be on the lookout for.
From a global perspective the return of the El Nino and La Nina is major risk which business should be thinking about. Research shows that El Niño is a naturally occurring climate phenomenon with the power to increase global temperature.
Some estimates suggest that this El Nino could cost the global economy as much as USD3,4 trillion over the next five years.
The impact of this on your business will depend on which industry you operate in. An obvious impact will be on supply chains, through availability of raw materials and increases in prices for some raw materials.
Another global risk to look out for is the disruption in shipping routes in the Red Sea, Black Sea and Panama Canal.
The global economy faces concurrent interruptions in the two major maritime trade waterways.
As the conflict in the in the middle east endures on, businesses are gradually circumventing the Red Sea trade route. The Red Sea route is one of the world’s most important trade routes.
Since November 2023 escalating tensions have led to ships being attacked by missile strikes.
On the Panama Canal, climate-induced drought has led to disruptions which have led to reductions of daily transits.
As a business you must understand that these disruptions have far-reaching consequences for inflation, food and energy security and it will be critical to monitor and assess these developments and their impacts and mitigants for your business.
Cyber risks are a top risk for 2024. Challenges from cyber risks have become a source of worry for many executives locally and globally.
Businesses are adopting technology innovations to drive efficiencies and compete better in their chosen industries.
Industries around the world are progressively becoming reliant advances such as IoT (Internet of Things), and digital services, such as cloud computing.
This rush to embrace the technology has also unintendedly opened new vulnerabilities. The downside is that cyber criminals are also advancing and becoming more sophisticated around with their approaches.
As a business leader one must now consider how to protect their business against cyber attacks and how to recover should they fall prey.
On a positive note, solutions such as those driven by such as those driven by AI will help augment and strengthen cyber security nets.
Another risk to looks out for in 2024 is the possible global economic downtown. At this juncture there seems to be no firm consensus among economists on the direction that the global economy is taking.
According to a WEF January 2024 “Chief Economists Outlook summary”, a portion of economist reflect on the global economic trends and point out that the outlooks still looks rocky and could weaken further over 2024 while some see the global economy improving.
Already we have witnessed the Japanese and UK economy enter recession and in other key markets such as the US, inflation has not receded as expected.
Should there be a global recession the impact will likely be felt across many industries and demand is likely to be depressed.
The last risk to look out for in 2024 is the rise of misinformation and AI.
Artificial Intelligence has become mainstream and has created much hype around its potential.
Large language models (LLMs) of generative AI such as Chat GPT4 and dozens of startups are churning out solutions that make life easier by improving access to all kinds of information, such as healthcare, education, legal and public services for people around the world.
Concern is however, present around the power and capabilities of AI to create misinformation and pollute the digital information ecosystems.
There will be need for businesses to think about what guardrails they can put in place to manage these risks.
There are many more other risks which we have not discussed in detail here which will also play a significant role in the outlook.
A good risk management strategy should be alive to these and make environmental analysis a key pillar in business decisions.
Elgin Chetsanga is a Head of Risk and Compliance at local Financial Institution. He writes in his personal capacity. Elgin can be reached on [email protected]
