Developing economies 'more risk aware'

Firms in developing markets see risk management as a way to increase competitive advantage

Businesses in developing countries are taking risk more seriously than those in developed countries, and are more likely to have risk managers at board level as a result.

A study by Datamonitor suggests that the impact of major global events is reflected in the risk management strategies of 72 per cent of businesses in Brazil, China, India and South Africa, compared with 48 per cent in the US and Europe.

"Businesses in developed markets appear bullish about their ability to deal with the potential impact of global risks such as epidemics and terrorism," said Francois Barrault, chief executive of BT Global Services, which commissioned the study.

"But they may be less prepared for major global events than their counterparts in emerging markets."

Businesses in mature markets are less nervous of future risks overall, although 36 per cent still believe they will be 'impacted' or 'highly impacted' by a global economic downturn.

The study also found that 81 per cent of firms in developing markets see risk management as a way to increase competitive advantage, compared with 44 per cent in developed countries.

"It is vital that international organisations ensure their risk management plans cover all eventualities, no matter how unlikely the risk seems," added Barrault.

"This should be seen as an opportunity to stimulate growth and liberate innovation, rather than a chore or an unnecessary expense."

Nearly nine out of 10 businesses in the developing world perceive international collaboration as vital to their future success.

But 68 per cent also believe that organisations from developed markets remain suspicious of the assurances they offer about their risk management policies, particularly when it comes to technology.