CEOs are worried South Africa is falling apart

 ·6 Feb 2024

A new report has highlighted the top risks facing businesses in 2024, including the biggest worries for companies and their chief executives in South Africa.

Topping the list – the collapse of critical infrastructure and possible blackouts have been flagged as the dominant concerns.

The Allianz Risk Barometer is an annual business risk ranking compiled by Allianz Group’s corporate insurer, Allianz Commercial, and other Allianz entities.

It incorporates the views of 3,069 risk management experts in 92 countries and territories, including CEOs, risk managers, brokers and insurance experts – with this year’s report marking its 13th edition.

Regarding the global business environment, the report said cyber and the closely interlinked peril of business interruption continue to rank as the business risks of most concern for companies around the globe.

Meanwhile, the more traditional threats posed by natural catastrophes, fire, and explosion climb back up the rankings.

At the same time, those issues that have become more prominent in recent years – such as the energy crisis, pandemic outbreak, and economic risks – fall down the list of company concerns as some Covid-19-related issues have abated, although challenges still loom, said Allianz.

Top-rated risks to business in South Africa

Critical infrastructure blackouts or failures have emerged as the number one risk for businesses in South Africa for the second consecutive year.

The report noted that this highlights the severe impact of power outages and the failure of essential infrastructure such as ports, railways, roads, and more on the economy and businesses.

The closely interlinked peril of the energy crisis has climbed to the fifth position, up from sixth place in 2023. Cyber incidents and business interruption remain in the second and third spots.

“South Africa’s business community must remain vigilant in the face of critical infrastructure blackouts and the risk of failures.

“The persistent threat of power outages and infrastructure failures poses significant challenges to businesses, disrupting supply chains and impacting the overall economy.

“The report underscores the urgent need for investment in infrastructure resilience and the development of contingency plans to mitigate the potential consequences of blackouts.

“By proactively addressing these risks, businesses can enhance their ability to withstand disruptions and ensure continuity of operations,” said Thusang Mahlangu, CEO of Allianz Commercial South Africa.

Interestingly, despite a highly contested election year for 2024, political risks and violence dropped from 4th place in 2023 to 6th place in 2024.

The other risks South African CEOs and other experts are concerned about include Climate change (7th), Fires or explosions (8th) – much like that experienced in the Joburg CBD last year – Theft, fraud, and corruption (9th), and changes in legislation and regulation (such as the NHI Bill) closing out the top 10.

Read: Failed state warning for South Africa

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