Complicated new world.
Richard Smith-Bingham, Director EMEA of the Global Risk Center at Marsh & McLennan, believes companies need to prepare for disruptive change.
It is my job to help companies and entrepreneurs identify critical risk factors for their business. However, the revolutionary political and technological changes that are currently taking place make me sceptical about the appropriateness of the euphoria that is currently driving stock market prices higher. In my view, global companies in particular will have to adapt to a more complex and perhaps also more volatile climate in the future.
}In the past 25 years, the largest companies have benefited from exceptionally good framework conditions. Since the early 1990s, they have been able to open up new markets comparatively easily, optimize their production costs and reduce their tax liabilities by transferring some of their profits to other countries. All this has catapulted earnings - and share prices - upwards.
I wonder now: Kann that will go on like this? And how will businesses have to adapt to changing business conditions? Globally active companies today are exposed to a multitude of uncertainty factors such as the influence of climate change or the trend towards stronger regulations. And they are concerned about the fragility of the economic growth environment, the volatility of currencies, geopolitical shocks or a changing competitive environment;
But I see the greatest challenge at the moment in the changing social and political environment. According to surveys, 70 percent of people today believe that securing jobs and industrial sites is more important than growth. In other words: The security of the workplace may apparently cost growth quietly. So it is no wonder that populists who are in favour of less international competition and more isolation are gaining a lot of popularity. Their influence on the political landscape will continue in the future, even if they have recently lost elections.
We are already witnessing a weakening of multilateral organisations. Important trade agreements break apart and are replaced by bilateral negotiations. Nationale Interests enjoy in such negotiations clear priority. And there are more states in the world with dictatorial traits. Political leaders are increasingly interfering with the markets.
As a consequence, the framework conditions for companies will tend to become more challenging in the future. If the wheel of globalisation is turned back, entire value chains must be questioned. Die Costs and frictional losses within the globally active groups are increasing. Firmen are confronted with increased local competition and protectionism. Direct investment abroad is associated with higher political risks. Public and political pressure to act in accordance with ecological and social needs is increasing.
Of course, there will also be new revenue drivers. Artificial intelligence, robotics, biotechnology and the digital revolution have what it takes to catapult productivity upwards. But there are risks here too. Wird the politics allow this in view of threatening job losses? And: The use of new technologies will make companies much more susceptible to cybercrime in the future in Bezug . According to Microsoft, the number of hacker attacks today is already at 600000 per week. A few years ago it was just 20,000.
Entrepreneurs need to be smart, strategic and agile in this environment. You should review your value chain again and again. Expect a period of high regulatory uncertainty. Bei Investments always pay attention to an exit option. And provide resources to optimize the use of new technologies. That means hard work. It will not be easy to succeed in the increasingly complex world of the future. ®