The Paris riots are an example of growing risk globally

The recent riots in Paris may have come as a surprise for some, but for others the social protests are growing sign of risk, writes Dr Sadaf Lakhani.

The recent riots in Paris may have come as a surprise for some. For others, the recent social protests that led to destruction of public and private property in Paris, and a potential declaration of a State of Emergency, were not unexpected.

While some analysts say that the cost of living in France has not been rising so steeply as to warrant this type of reaction, macro indicators themselves rarely tell the full story.  Nor do they give the kinds of insights required to better understand and manage risks.  For social observers, trouble had been fomenting for some time. For governments and businesses, the results of interaction between the macro indicators they may be watching and more granular social risk indicators, is key to understanding and forecasting moments like the Paris riots; and the broader impacts that will result in losses for governments and businesses alike.

“Global and regional risks, such as the escalation in trade wars also have highly context-specific manifestations as they interact with local factors, and in some cases amplify risk.”

Last year, 70 per cent of global companies with an annual turnover of more than $10 billion reported a single event in 2017 in which they lost more than $100 million. And these events were not one-offs.Losses were continual, with CEOs reporting that political risk is at the very top of their list of concerns, and that they were looking for new ways of managing risk.

Populist movements,  elections like those seen in Latin America, growing potential for conflict in Africa and the Middle East, can drive further waves of displacement. Changes are afoot and risk is growing, and not just in emerging markets.Structural changes in European economies, slowing growth in the U.S., Europe and China. Widening inequalities between social groups have contributed to growing grievances in traditionally safe markets. Global and regional risks, such as the escalation in trade wars also have highly context-specific manifestations as they interact with local factors and in some cases to amplify risk. But without knowing what that means in a specific market and how to manage those risks before they become a threat, companies are likely to continue to sustain losses and governments remain at a loss of what to do.

Sadaf Lakhani

CEO and CoFounder Cognitiks

Dr Sadaf Lakhani is the CEO of Cognitiks, which assists a range of businesses in high-risk markets, while also working closely with governments, DFIs and NGO partners that support sustainable growth for businesses. Dr Lakhani is a social development professional with expertise in governance and private sector development in fragile situations and conflict-affected states. She has worked with The World Bank Group, United Nations Development Programme, the European Commission in policy and program roles, and has advised the United States Institute of Peace on extractive industries and conflict prevention. She is also on the advisory board of invest2innovate.

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