New Zealand businesses are going to have to be on their toes this year, RiskNZ says.
The volatility and uncertainty created by a raft of unusual and challenging factors are manifesting as risk and making planning for 2016 a significant challenge, says chairman Geraint Bermingham.
“We are living in interesting times. The immediate future creates a complex risk environment in which to do business.
“The financial indicators have not been good so far this year. As deflationary pressures continue to rise, most major developed markets overseas are feeling the pressure. Various efforts to abate deflationary pressures have been ongoing for some time but the measures seem to have done little to mitigate this fundamental.
“To make matters worse, the multi-year term downward-slide in almost all major commodities including fuel, metals, agricultural raw materials, and food is if anything picking up pace.
“Governments are struggling to understand how to respond to this economic landscape, but will this abnormal situation become the new normal? Executives and those tasked with managing risk need figure what this means to their strategic risk profile.
“With regard to deflation, businesses may have to accept that the abnormal has become the normal. Given the lack of experience of such an environment, businesses need to be taking time out to look into the future - even to run simulation exercises to understand the risks and opportunities.
“Add to the underlying structural weaknesses, we have the ongoing concerns of the unexpected war of cultures as represented by ISIS and other groups. Motivated by the new forces of the global internet that is seemingly creating ‘in-your-face’ cultural tensions.
“The power of social media is helping develop an army of super-enabled self-directed and in some cases apparently invisible ground troops. There are some obvious questions to be asked. Will this war reach our shores? Will young New Zealanders start to think twice about heading off on an OE? Will immigration pressures increase as people seek out safe countries? Conversely, could a major incident cause people to think twice about travelling and hence tourism take a hit?
“There is no doubt these are interesting times - times where to prosper, businesses and other organisations need to apply best practice risk management processes, keep thinking ahead and remain agile,” Bermingham says.
RiskNZ is the sector body in New Zealand bringing people, businesses and organisations together to manage risk and ensure New Zealand prospers.
Photo: Risk NZ chair Geraint Bermingham.