Key Issues Currently Reflected in the Risk Selection
Respondents identified the top three current risks for Latin America as the economic slowdown, business interruption and commodity price risk. They expect political risk to rise from number seven today to number two in three years. Much like other parts of the world, Latin America is still struggling with the impact of the pandemic, which explains why business interruption ranked so high. Business interruption is also vulnerable to risks arising from non-damage exposures such as the pandemic and social unrest. The region is aligned with others in its growing concerns about cyber attacks and data breaches, which are predicted to jump from ninth place to fourth in three years.
Businesses across the region are underrating climate change risk. This risk should be in the top 10, given the combination of weak environmental-preservation policies in Latin America, the growing number of extreme events globally, vast evidence of environmental degradation including deforestation and a shortage of fresh water, and other factors. Environmental degradation will have a major impact on the region’s economic activity, business environment and risk landscape, and companies should prepare for the potential consequences now by including this risk near the top of their risk registers.
Future Challenges and How Organizations Can Address Them
Companies across Latin America will confront many significant challenges. At the top of the list are managing the region’s economic recovery and pursuing environmental, social and governance (ESG) agendas to reduce social inequality and increase political stability. To continually assess the key risks associated with these challenges and optimize their plans accordingly, companies can employ a variety of scenario-planning techniques.
Current Top 10 Risks
Predicted Future Risks