For a country widely regarded as one of the best in the world for doing business, do New Zealand organisations need to be on their toes in 2016?
Placed only behind Denmark, New Zealand is often recognised on the global stage for its transparent and stable business climate, one that encourages entrepreneurship and growth.
But given the volatility and uncertainty created by a raft of unusual and challenging factors that are manifesting at national and global levels, RiskNZ chairman Geraint Bermingham believes the knock-on effect poses “significant challenges” for Kiwi firms in 2016.
“We are living in interesting times,” says Bermingham, who leads RiskNZ’s group of businesses and people evaluating the country’s risk levels.
“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, Bermingham believes 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.
As such, Bermingham believes 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,” Bermingham questions.
“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, Bermingham believes 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,” Bermingham adds.
“Motivated by the new forces of the global internet that is seemingly creating ‘in-your-face’ cultural tensions.”
In addition, Bermingham believes 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,” he adds. “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.”