crises and an oil price shock to the global economy are the greatest threats to UAE business, say executives
Dubai, UAE; March 2, 2015: The impact of global fiscal crises is the biggest risk to doing business in the United Arab Emirates, according to the World Economic Forums Executive Opinion Survey, which was featured within the 2015 Global Risks Report, developed with the support of Zurich Insurance Group.
The World Economic Forum has conducted the Executive Opinion Survey every year since 1979. It interviewed more than 13,000 business executives across 144 economies for the 2015 report. Respondents were asked to select the five global risks that could threaten their ability to do business in their home country.
Fiscal crises in key economies was ranked as the number one risk to doing business in the UAE by 21.4% of the UAE executives surveyed. They were concerned that contagion from failures in major economies could adversely impact the UAEs business environment. In fact, fiscal crises was the primary concern for doing business in 93 (65%) of the 144 economies covered by the survey.
The second highest risk ranked by the UAE executives, with 11.2%, was an oil price shock; followed by a liquidity crises (10.5%), failure of a major financial mechanism or institution (9.4%), and violent interstate conflict with regional consequences (6.8%).
The risks to doing business in the UAE mirrored many of the same threats identified by executives in the other 144 countries. The only difference in the top five was that the global survey ranked profound political and social instability as the fifth biggest risk, whereas UAE business executives did not see this as a threat in their home market.
Perhaps inevitably, given the UAE Governments commitment to the long-term development of the Emirates, the prolonged neglect of critical infrastructure and mismanaged urbanization ranked particularly low in the UAE, and well below the global average.
Brian Reilly, CEO of Zurich Insurance Middle East, commented: Businesses in the UAE face a plethora of global risks. Given the UAEs position as a global business hub, and the severe impact that the previous global financial crisis had on the economy, I am not surprised to see the risk of fiscal crises ranked as the biggest threat to doing business in the UAE.
Global risks do not respect national boundaries so it is imperative that executives are aware of the biggest risks to their business in the UAE. As a leading global insurer, Zurich prides itself on helping businesses of all sizes to identify and protect themselves from these risks.
Top Five Risks to Doing Business, by Country (ranked out of 19 risks)
Interstate conflicts and water crises remain key global risks
The World Economic Forums Executive Opinion Survey complements the Global Risk Report, which features an assessment by experts on the top global risks in terms of likelihood and potential impact over the coming 10 years.
The 2015 report found that interstate conflict with regional consequences was the number one global risk in terms of likelihood, and the fourth most serious risk when considering the prospective impact. In terms of likelihood as a risk, it exceeds extreme weather events (2), failure of national governance systems (3), state collapse or crisis (4) and high structural unemployment or underemployment (5).
When examining the potential impact of global risks, the nearly 900 experts that took part in the Global Risk Perception Survey rated water crises as the greatest threat facing the world. Other top risks which ranked highly by impact, beside water crises and interstate conflict, were: rapid and massive spread of infectious diseases (2), weapons of mass destruction (3) and failure of climate change adaptation (5).
