The re-election of Donal Trump as U.S. President and the changing global role and investment landscape, global trade war as well as rising political violence are among the 5 main risks to international businesses in the coming year. That is according to Control Risks recently introduced Risk Map 2025. Oludamilare Adesola, Associate Director at Control Risks joins CNBC Africa to unpack the report.
The re-election of Donald Trump as U.S. President and the changing global role and investment landscape, global trade war as well as rising political violence are among the 5 main risks to international businesses in the coming year. That is according to Control Risks recently introduced Risk Map 2025. Oludamilare Adesola, Associate Director at Control Risks joins me now to unpack the report. Dami, thank you so much, pleasure to have you on the show. So there are 5 of them that the world has to look out for, all starting with the United States. But I remember the report did also highlight that it didn't actually matter who won the presidency but having President-elect Donald Trump adds layers to the uncertainties for businesses. Could you speak more to that point? Yes. So if you just look back maybe in the last decade, you'd see that there has been a trend in United States politics that has just been driven first of all by polarisation with the Republicans and the Democrats and how that is impacting the ability to scale laws that are needed and the priorities that they have internally. So whether it comes to interest rates or it comes to budgets and budget deficits and budget financing. And so those are the things that they're experiencing internally but also looking at their foreign policy and how there has been a shift in the focus looking at before U.S. was first to rise to pay police fund for the world and now that declining influence on one hand being that the government, the United States government is looking at having an America first driven initiative, which is more in Trump but was also seen in Biden's administration. And so what you're looking at there is on one hand the U.S. is also pulling back but another hand the government in various countries are pushing back against that interference that the United States was previously did before. Let's talk, I mean the second one on the list is redline geopolitics. We know that obviously trade war between the U.S. and China is expected, will escalate under President Trump. But talk to us about what we need to know when it comes to redline geopolitics. So redline geopolitics and trade war are slightly different but they're the same in the impact that they have on supply chains. But when we talk about redline geopolitics, we're actually in a physical conflict. So we're talking about South China Sea, we're talking about Middle East and Asia-Algaza, we're talking about Russian-Ukraine war and how that can have a very exponential implication for supply chains across the world. It's not just international business, even local businesses would feel the pinch if for example with wheat what happened with Russian-Ukraine war and how that affected the supply of wheat and the price of bread locally and then the poor man on the road cannot afford that. So that trickle down effect just from something happening so far away in the world and that's just the implication of globalization and a connected world and global village that we live in today. And so what we are seeing now, the difference between the two, is that on one hand the geopolitics and the escalating threats that we're seeing, it's becoming bolder and bloodier, where before it was really countries, conflict was really more trade wars, the Cold War, it was pushing out a country by putting sanctions against them, but now it's actually moving to mobilize your soldiers on the ground, even looking at also the internal conflict that we're seeing and that feeds to the fourth point about rising political violence, where there is a lot of radicalization and extremism and looking at us here in Nigeria, us here in ECOWAS and how in the last five years or so, just around COVID till now, we've had an increase in the different juntas that have come up in Niger, in Burkina Faso and some of these countries and how in the early 2000s or so, this was removing away, we thought we were moving away to a democracy, into democratic governments across the continent and now it seems like we're taking steps back and that just shows about the bolder, bloodier geopolitics that we are seeing and more violence and how that could potentially impact businesses. I found the fifth point interesting, digital concentration risks. I was just reading a comment from the CEO of Control Risks, talking about the fact that criminal networks are also trying to take advantage and be more prominent also on the global space, even as businesses, geopolitics, all of that going on. Talk to us about this digital concentration. So the digital concentration risk is actually talking about the infrastructure and so if you look at the map, so even here in Nigeria, we have about six functioning undersea cables and so you know what happened at the beginning of the year, there was a damage to one of them and you know, all the networks were having challenges, all the banks were having challenges and the implication that that had for the economy and so it's not just Nigeria. If you actually look at the global digital infrastructure, you see that it's reliant on just a few ecosystems and what that means on one hand for the vulnerability that we would face in the event of inadvertent damage, but also like you mentioned about attacks, it then means that it's more vulnerable to attacks. If there's an attack on one ecosystem that is serving 15 countries, what that could do for businesses in that region and the trickle-down effect it would have on the global economy and so again, it's about the double-sidedness of globalisation where geopolitics then has an exaggerated implication on local businesses, on foreign and local businesses and also just on the economy that you see with the everyday income earner. I mean, a lot for businesses to digest and think about, you know, as we're going to the new year, as we're going to the Trump presidency, etc. I mean, what would be key for success for businesses? We've talked about the US, obviously there's still opportunities at least domestically, trade investment, all of that will go on even in the face of geopolitics, but what would be the differentiators in terms of those who succeed and those who don't? So really what we are doing, we're not trying to be into a war and doom, you know, but we're just trying to highlight it up front that we want anybody, anybody that is in business will face risks no matter how heightened this risk might be, but what we are emphasising is that individually each business should sit down and actually conduct risk assessment and so whether they're looking at the five ones that we've presented or the ones beyond whatever they come up with and it's risk, when you're assessing risk, there are two ways, you look at looking at the probability, how likely is it to happen and if it does happen, you're then looking at the impact, what's the implication for me. So business that is, for example, has, you know, donors or investors from the US would be significantly impacted by the uncertainty that is coming out from the US stepping back from its role as the global hegemon, but on the other hand, a business that is more reliant on, you know, agriculture in some of these areas and reliance on farming and the heightened extremism would have an exponential impact on them that, you know, investments from the US might not have and so it's just looking at what your, what the vulnerable spots are and then actually developing strategies to mitigate that. Thank you so much Damy, it's been a pleasure having you on the show today, thank you for that insight. Ludam Lare, Desjardins Associate Director at Control Risk.
Theme: Global Risks and Business Outlook for 2025
The international business landscape is facing significant uncertainties and risks in the coming year, as highlighted by the recently introduced Risk Map 2025 by Control Risks. The re-election of Donald Trump as U.S. President, changing global roles, investment landscapes, escalating global trade wars, and rising political violence are among the top five risks identified by the report. Oludamilare Adesola, Associate Director at Control Risks, provided valuable insights during a recent interview with CNBC Africa to discuss these critical issues. Dami emphasized that the polarization within United States politics, driven by differences between Republicans and Democrats, has hindered the enactment of crucial laws and impacted internal priorities such as interest rates, budgets, and foreign policy. The shift towards an 'America first' approach under the Trump administration, which is also evident in Biden's policies, signals a declining U.S. influence globally and a pushback from other governments against U.S. interference. The report also addresses the risk of redline geopolitics, which encompass physical conflicts in regions like the South China Sea, Middle East, and Russian-Ukraine war. These conflicts not only disrupt international business supply chains but also have local repercussions, as seen in the impact on wheat supply and bread prices. The escalation of geopolitical threats to mobilize soldiers on the ground poses a bolder and bloodier conflict scenario, further intensifying global risks. A concerning trend highlighted by Control Risks is the rising political violence and extremism witnessed in various regions, including Nigeria and ECOWAS countries. The resurgence of radicalization and the emergence of junta groups signify a regression from democratic governance, presenting challenges for businesses operating in volatile environments. The interconnected nature of global politics and violence underscores the need for businesses to mitigate potential risks. Moreover, the report delves into digital concentration risks, emphasizing the vulnerability of global digital infrastructure to damages and cyber attacks. The reliance on a few ecosystems for digital connectivity poses significant threats to businesses and economies, as demonstrated by disruptions caused by undersea cable damages in Nigeria earlier this year. Businesses must enhance their risk assessment protocols to address these evolving threats in the digital realm. As businesses navigate through the uncertainties of 2025, Dami stressed the importance of conducting comprehensive risk assessments to evaluate the probability and impact of potential risks. Differentiation in success for businesses lies in their ability to identify vulnerabilities and develop strategies to mitigate these risks effectively. While challenges persist in the face of geopolitical uncertainties and escalating conflicts, opportunities for trade and investment remain viable for businesses that adopt proactive risk management approaches. In conclusion, the insights provided by Control Risks highlight the complex and dynamic nature of global risks facing international businesses in 2025. By understanding these risks and implementing robust risk management strategies, businesses can navigate through turbulent times and capitalize on emerging opportunities in the evolving global landscape.
"Differentiation in success for businesses lies in their ability to identify vulnerabilities and develop strategies to mitigate these risks effectively."
['Control Risks', 'Risk Map 2025', 'global risks', 'international business', 'geopolitics', 'trade war', 'political violence', 'digital concentration risks', 'risk assessment']