Companies operating in Nigeria increasingly worry about the struggling economy, corruption, volatility and political risks and violence. Other growing concerns are digital dilemmas arising from new technologies and cyber risks (#5), as well as government policies which do not enable businesses to thrive. These are the key findings of the 6th annual Allianz Risk Barometer analyzing corporate risks globally, as well as by region, country, industry and size of business.

The report is based on a survey conducted among 1,237 risk experts from 55 countries. In Nigeria, Allianz Global Corporate & Specialty (AGCS) Africa worked with the Association of Enterprise Risk Management Professionals Nigeria (ERM), Risk Managers Society of Nigeria (RIMSON) and Risk Managers Association of Nigeria (RIMAN). “The Allianz Risk Barometer 2017 is a worthy compass, telescope and guide which Risk Managers, Investors, Professionals, Governments, Policy Makers and Corporate Entities should not ignore in strategic decisions in 2017,” says president of RIMSON Engineer Jacob Odeonsun.

Nigerian risk managers sighted tough macroeconomic conditions and market volatility as their top two risks. “Nigeria faces macroeconomic challenges including low commodity prices, the Chinese slowdown and the tightening of US monetary policy and also suffers their own internal pressures such as inflation, weak domestic demand and socio-political tensions. The country’s growth is held back by weaker macroeconomic environment, the struggling financial sector, underdeveloped infrastructure, insufficient health and education,” says Delphine Maïdou, CEO AGCS Africa at a press conference held in Lagos today.

To mitigate volatility risks and anticipate any sudden changes of rules that could impact markets, companies in Nigeria will need to invest more resources into better monitoring politics and policy-making around the world in 2017. According to trade credit insurer, Euler Hermes, a subsidiary of Allianz SE, since 2014, there have been 600 to 700 new trade barriers introduced globally every year.

Corruption was ranked fourth indicating that it is still a concern in the country. Corruption in Nigeria could cost up to 37% of GDP by 2030 if it’s not dealt with immediately. This cost is estimated to be nearly $2,000 per person by 2030. Corruption is ranked second as one of the most problematic factors for doing business in Nigeria in the Global Competitiveness Report. A significant reduction in corruption will boost current per capita income and improve the lives of many in Nigeria.

Political risks and violence is still a major challenge largely due to terrorism and kidnap for ransom (KNR). The overall risk for Nigeria in 2017 is high on crime, terrorism, conflict, political violence and kidnap. The resurgence of violence in the Niger Delta is expected to continue into 2017. Militant groups are likely to continue high-profile attacks on oil and gas infrastructure to press the federal government into meeting its demands, which include greater autonomy for the region and a greater share of the oil wealth, which may be untenable considering Nigeria’s current fiscal woes. Greater military action risks increasing anti-government sentiment.

Kidnapping, primarily for the purposes of financial gain, will remain a complex and multifaceted security threat in Nigeria in 2017. The country was one of the world’s top five worst kidnapping-affected countries and the region’s kidnapping capital. However ongoing state military offensives over the past 18 months have led to the relative containment of Islamic State (IS) affiliate, Boko Haram, in north eastern Nigeria. According to available information, Boko Haram conducted no successful abductions of foreign nationals within the country in 2016. However the group is extending its operations into Chad and Cameroon and this could lead to an increase in KRE activity.

Globally, business interruption (BI) continues to lead the ranking for the fifth year in a row, primarily because it can lead to significant income losses, but also because multiple new triggers are emerging, especially non-physical damage or intangible perils, such as cyber incidents, and disruption caused by political violence, strikes and terror attacks. This trend is driven, in part, by the rise of the “Internet of Things” (IoT) and the ever-greater interconnectivity of machines, companies and their supply chains which can easily multiply losses in case of an incident. Companies are also facing potential financial losses with the changing political landscape leading to fears of increasing protectionism and anti-globalization.

“Companies worldwide are bracing for a year of uncertainty,” says Chris Fischer Hirs, CEO AGCS SE. “Unpredictable changes in the legal, geopolitical and market environment around the world are constant items on the agenda of risk managers and the C-suite. A range of new risks are emerging beyond the perennial perils of fire and natural catastrophes which require re-thinking of current monitoring and risk management tools.”

At the same time, increasing reliance on technology and automation is transforming, and disrupting, companies across all industry sectors. While digitalization is bringing companies new opportunities, it is also shifting the nature of corporate assets from mostly physical to increasingly intangible, bearing new hazards, above all cyber risks (30% of responses). Companies ranked cyber threats a close #3 globally, climbing to #2 across the Americas and Europe and the top risk in Germany, the Netherlands, South Africa and the UK. At the same time, it is the top concern globally for businesses in the information and telecommunications technology and the retail/wholesale sectors.

“Cyber incidents is ranked #5 in Nigeria with the most common threats being from hackers, disgruntled employees, negligence and competitors,” says Nobuhle Nkosi Head of Financial Lines AGCS Africa. “This is doubled-edged sword to the country as Africa has a particular role in embracing and responding to new technologies compared to mature markets while speeding up cyber security and personal data protection legislations.”

The threat now goes far beyond hacking and privacy and data breaches, although new data protection regulations will exacerbate the fall-out from these for businesses. Time is running out for businesses to prepare for the implementation of the new General Data Protection Regulation across Europe in 2018 – although the cost of compliance will be high, the penalties of not doing so could be even higher. Meanwhile, increasing interconnectivity and sophistication of cyber-attacks poses not only a huge direct risk for companies but also indirectly via exposed critical infrastructures such as IT, water or power supply. Then there is the threat posed by technical failure or human error, which can lead to long-lasting and widespread BI exposures. In the digitalized production or Industry 4.0 environment, a failure to submit or interpret data correctly could stop production. Businesses need to think about data as an asset and what prevents it from being used. Results also show that smaller companies may be underestimating cyber risk: in this category (revenues <€250 million), cyber ranks only #6. However, the impact of a serious incident could be much more damaging for such firms.

Source:https://leadership.ng/business/567694/report-businesses-in-nigeria-worried-about-struggling-economy-corruption

Cc:lalasticlala, Seun, puskin, dominique, naijacutee, FOD, Mynd44, OAM4J, DisGuy, justwise, HumbledbYGrace, mukina2, osystein

Buhari's change is corrosive

Serious report, and this means that we have to spend more making our law enforcement work much better

that's why our economy is crashing

This is serious

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Tax, Tax, Tax anything, just about anything. That's how they feel the economy would work.

Nigeria's level of corruption is legendary.

9jakohai:
Serious report, and this means that we have to spend more making our law enforcement work much better

tell dat to d dullard.sometımes,ı wonder what we dıd to deserve thıs cattle herdsman as presıdent

2019 around the corner and we will correct our mistake...

Wait o, I thought they were chanting all over the place that "a new Sheriff is in town". Unfortunately, it's been business as usual

Space for sale. Economy di bad

Capitalism rules, but only in Nigeria ll u see government middling into biz.... u carry load AGERO boys won't let u rest.... the poor road ll damage the valuables u carrying.

Mehn it's terrible... but in all cargomove still delivers "every time all d time & everywhere"

Can I borrow some Maggi please?

Yeye sheriff in town...weve not seen anything yet...

I rest my case

worlexy:
Wait o, I thought they were chanting all over the place that "a new Sheriff is in town". Unfortunately, it's been business as usual

sheriff chanters are now in limbo with the sufferings the new sheriff has blessed them with...
I am so annoyed with nigerians...

This report is filled with economic jargon. Are you trying to pass a message to us or trying to impress us. If you are confused don't confuse me. Common to say something in simple words. You just dey blow Grammar. So how does this report ease the suffering. You are decorated with degrees from all the fancy school in the world but you don't know what affect the common man.

Even the Hausa's have already left the man Buha, but our die hard zombies are ashamed and afraid to question their slave master For the fear of egunjé

And some wiked pipu seriously dey campaign online to kill our saving grace for this recession. Make una continu, sebi na we all dey dis yeye contri.

..

Nice report. The current leadership in Nigeria is not strategic and such well-analyzed study may not mean much to them. Mediocrity!

Hmm

ugochukwufrenzy:
tell dat to d dullard.sometımes,ı wonder what we dıd to deserve thıs cattle herdsman as presıdent

nothing, that's what and as long as you.... We continue doing nothing it will only get worse

worlexy:
Wait o, I thought they were chanting all over the place that "a new Sheriff is in town". Unfortunately, it's been business as usual

he is. And it's all going according to plan

Izonpikin:
sheriff chanters are now in limbo with the sufferings the new sheriff has blessed them with...
I am so annoyed with nigerians...

name one chanter

Gariki:
Even the Hausa's have already left the man Buha, but our die hard zombies are ashamed and afraid to question their slave master For the fear of egunjé

when you were collecting your own, e no sweet una, why are you now complaining abi you think say na only una go de enjoy

Cromagnon:
when you were collecting your own, e no sweet una, why are you now complaining abi you think say na only una go de enjoy

collecting what ni

veekid:
Buhari's change is corrosive

summary while

With the current trends, what are the odds of we making it to 2019?

akandry:
2019 around the corner and we will correct our mistake...

kashflynn:
With the current trends, what are the odds of we making it to 2019?

By the grace of Almighty

Yes let it struggle..why shuld we import tinz we can produce here under buharis watche.g tomato paste ad co.
We know wot to do but wont do it,we are meant to be a producing nation by now..producing diffrent products for Africa but tribalism,hate and jealousy hinderd evrytin..And dis is d reason why I hate buhari
Abeg Make d economy die joor make evry body eye clear so im go trigger d much anticipated revolution.