The looming Brexit, political strife elsewhere in Europe, the rise of new regimes in the Americas and a slew of potentially contentious elections in Africa are among the key global risk factors facing businesses in the year ahead, according to Drum Cussac's 2019 Risk Map.
The U.K.'s impending departure from the European Union, dubbed Brexit, will create "significant uncertainty" for businesses in the long term, stemming from lingering issues around the mechanics of the departure, which still must be ratified by the British parliament. Should a deal fail to be reached, the resulting "no-deal Brexit" could have major implications through the economic, business and political spheres, the report warned. Crossborder relationships between the U.K. and the rest of the EU will be particularly affected, including trade, immigration and air travel. The Brexit deadline is set for March, so uncertainty will linger through at least the first quarter of 2019, Drum Cussac predicted.
But while Brexit has dominated the headlines, developments elsewhere in Europe could prove even more significant to global risk. Among those are the increase of populism that has given rise to contentious political strife in Hungary, Poland and especially Ukraine, where the likely election of Western-aligned Yulia Tymoshenko as president is likely to increase simmering hostilities with Russia.
Meanwhile, the Americas are facing uncertainty stemming from the installation of new "outsider" administrations in Mexico and Brazil—Latin America's two largest economies—along with the continued political polarization in the U.S., where a divided Congress is likely to face legislative gridlock. The Department of Justice's obstruction and collusion investigation of President Donald Trump could lead to impeachment proceedings and resulting political upheaval, Drum Cussac said.
Electoral politics also cast a shadow of uncertainty over Africa, where more than a dozen countries are slated to hold elections in 2019; several incumbent governments face "significant challenges" as they seek to maintain power, including the Democratic Republic of the Congo, which is hoping for its first peaceful transition of power since becoming independent in 1960. The continent's two largest economies, Nigeria and South Africa, also face elections; Nigerian incumbent Muhammadu Buhari is particularly likely to be ousted, the report predicted.
Finally, the report identified the main risk facing Asia and Oceania: the rise of Islamist militant groups in Southeast Asia, particularly in Indonesia and the Philippines, threatening to undermine security. Elsewhere in Asia, concerns about the security environment on the Korean Peninsula have been tamped down thanks to a combination of U.S. sanctions against North Korea and South Korean engagement that led to a historic summit earlier this year.