Overall, energy price shock, unemployment and terrorist attacks are the top three biggest risks facing the Mena region, followed by failure of regional and global governance, fiscal crises and cyber attacks.
Unmanageable inflation, water crises, illicit trade and failure of financial mechanisms or institutions were the other top 10 risks, according to the latest Middle East and North Africa Risks Landscape, according to report on Thursday from insurance firm Marsh in collaboration with the World Economic Forum.
“The top risk, 'energy price shock', comes at a time when some countries have taken steps towards diversification, but the region is still largely a hydrocarbon economy,” according to the study based on a survey of the WEF’s stakeholder communities, the professional networks of its advisory board, and members of the Institute of Risk Management. The survey received 916 responses.
Oil prices increased substantially between 2017 and 2018, from around $50 to $75 per barrel – representing a “significant fillip” for the region’s oil producers.
“However, vulnerabilities to swings in oil prices have not disappeared and are particularly pronounced in countries where government spending is rising.”
Many GCC countries are implementing fiscal reforms such as removing long-held energy price subsidies and introducing taxes to boost their economies while oil prices remain lower than they were five years ago.
In other Mena countries, political uncertainty fuelled more concern than in the GCC – for example, in Tunisia, “profound social instability” was named as the biggest risk, while state collapse or constitutional crisis was the biggest risk for Lebanon, which just instated a new parliament following nine months of political deadlock.
"At a time when global risks are intensifying, interconnecting and spanning national and regional borders, Mena organisations should adapt their business models, enhance risk management and become more resilient if they want to maximise growth opportunities and continue being relevant," Christos Adamantiadis, chief executive of Marsh Middle East and Africa, told the The National.
In Saudi Arabia, the biggest market in the GCC, energy price shock was the top risk facing the kingdom, according to the study.
Cyber attack was the second-biggest risk facing the kingdom, the report said, followed by terrorist attack and unemployment or underunemployment.
In Oman, energy price shock was the top risk, then unemployment/underemployment followed by fiscal crises. In Kuwait, too, energy price shock was named the biggest risk, followed by terrorist attack and failure of urban planning.
Cyber attack is the top risk facing the UAE, said the report, adding that energy price shock was the second-biggest risk facing the country, followed by misuse of technology and data fraud or theft.
