10 biggest risks to business in South Africa
A new report from risk management firm Aon lists the things that retailers believe pose the biggest risk to their businesses.
According to Aon’s Retail and Wholesale Report for 2015, the retail and wholesale industry in South Africa has grown from around R106 billion in 2011 to a projected R122 billion by 2015, despite a tough economic climate.
With this growth comes higher risk, as companies face increased competition and stiff regulatory challenges, and find themselves pushing to constantly improve when innovation is the name of the game.
Over and above all of these things, though, South African retailers worry about one thing more than anything else: damage to their reputation and brand.
“Many well-known retailers both locally and abroad are finding their reputation affected by unexpected incidents such as data breaches, customer service failures, offensive language on apparel, extortion, inappropriate remarks or behaviour by company executives, and supply chain disruptions,” Aon said.
“In an age of 24-hour news cycles and instant social media, a crisis could spread around the globe within hours or minutes.”
This has lead to the relevance of a brand or a product’s reputation increasingly having a direct impact on a business’s bottom line, Aon said.
The second-biggest worry for retailers is business interruption – where a tough economy, strike action by employees, and a bevy of other factors cause disruptions in business.
Increasingly, technology-related factors are putting pressure on retailers – specifically in terms of competition, maintenance, and security.
According to the report, South Africa is showing an increasing number of Internet users who are steadily embracing a culture of online shopping – this means that there is an increasing number of online retailers who are entering the space – challenging traditional retail.
As more retailers move online, this presents even greater risk, as the online space is fraught with risks relating to computer crime, hacking, viruses, and malicious codes – which costs the industry billions each year.
Top 10 risks for retailers in South Africa:
- Damage to reputation/brand
- Business interruption
- Economic slowdown/slow recovery
- Regulatory/legislative changes
- Increasing competition
- Distribution or supply chain
- Computer crime/hacking/viruses/malicious codes
- Technology failure/system failure
- Failure to innovate/meet customer needs
- Failure to attract or retain top talent
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