Volatility will continue for firms in 2012

Elizabeth Fournier
GLOBAL businesses face increasing volatility in 2012, as weak economic performance and declining prosperity continue to aggravate tension and increase scrutiny on corporate practices.

With growth prospects hampered by ongoing debt and political crises across the world and social unrest likely to continue as food and fuel costs increase, international businesses will face unprecedented challenges to remain viable, according to the latest RiskMap analysis from business risk consultancy Control Risks.

They will also come under increasing pressure to be transparent and accountable, as public hostility and financial pressures throw a spotlight onto corporate procedures.

“The one indisputable lesson from 2011 is that planning for low-probability but high-impact events must be part of any strategic forecast,” said Richard Fenning, chief executive of Control Risks.

The research also suggest that the growing wave of social protest that has swept certain regions is unlikely to subside, as tensions aggravated by austerity programmes and political unrest intensify.

Tunisia, Egypt and Libya in particular begin 2012 facing highly contested futures, while ongoing protests in Syria and Yemen could escalate into more violent situations.

Despite the long list of threats, Control Risks has also identified several countries that offer the best opportunities for investment in the coming year, including Bulgaria and Libya.

The latter is seen as a source of financing for wide-ranging reconstruction through sovereign wealth fund and oil revenues, while the former is feted for its low budget deficit and strong links to the EU.

Colombia, Mozambique and Sri Lanka are also seen as key countries for investors to monitor, offering new opportunities for development in regions ripe for long-term investment.

Despite an expectation that export-heavy economies in Asia will suffer from turmoil in Western markets, 2012 will see Asia’s role as the engine of global economic growth continue, according to the report.