With increased political uncertainty around the globe, including Brexit, it is no surprise that Multinationals are exercising caution around a number of risks. However one stands out more than others; Political environment risk; described as an unstable or unsupportive government, policy or political unrest. It is the biggest risk concerning multinationals today according to the results of our Autumn 2017 Risk and Confidence survey.
Given the interconnectedness it will be no surprise that the second biggest risk is that of economic risk; factors such as rising interest rates, changes in GDP, inflation and currency instability posing questions for multinational boardrooms. Furthermore the larger the company turnover, the more concerned multinationals are by economic risk, with those with turnovers of over £100,000 being almost 10% more concerned by economic risk than those making under £25,000.
The increasingly complicated international playing field is affecting multinationals in a number of ways, including these areas:
- Sterling: Twice as many business leaders see Brexit and sterling weakness as negative than those who see it as positive (Risk and Confidence Survey Spring 2017). With fluctuating exchange rates and continued concern about the UK’s access to the Single Market, most UK multinationals are viewing Brexit with caution.
- Access to the Single Market: This particularly concerns multinationals, as 63% of multinational business leaders believe Europe is the region with the greatest capacity to drive business growth now, according to our latest Risk and Confidence survey. The second largest area believed to hold the greatest capacity to drive business growth, Asia, is predicted to decrease in the next 6 months. Whilst North America and the UK are both predicted to grow as regions with the capacity to drive business growth, this capacity does not equal Europe.
- GDPR: Despite committing to leaving the EU in 2019, the UK will nevertheless be complying with the implementation of GDPR. GDPR will have increased enforcement powers and will have an expanded territorial scope meaning non-EU multinationals who offer goods or services to data subjects in the EU will also have to comply.
Jason Beelders, Head of Multinational
These findings come from our Risk and Confidence Survey, for more insights download your copy here www.cnahardy.com/pulse.