Prepared by the World Economic Forum with the support of Marsh & McLennan Companies and other partners, this briefing paper examines the risk environment for the Middle East and North Africa (MENA) region in the light of local business leader concerns and the 2019 Global Risks Report.
Economic, governance and security challenges are of most concern to those surveyed for the Regional Risks for Doing Business 2018 report. The risks that came out top (Figure 1) reflect two things: first, the persistent dependency of many MENA economies on oil and gas resources and the economic transformation journeys that some of them have embarked on; second, the consequence of prolonged armed conflict and unresolved societal divides.
Because today’s risks are complex, multifaceted and often interconnected, a go-at-it-alone approach will be ineffective in reducing risks and building necessary resiliency.
In the background can be detected apprehension about progressive climate change impacts, especially with respect to water shortages. The potential for these risks to amplify each other indicates not only the scope for ongoing volatility but also the imperative for determined and sustainable transition agenda.
Figure 1: Top Ten Risks in the Middle East and Africa
1. Energy price shock
2. Unemployment or underemployment
3. Terrorist attacks
4. Failure of regional and global governance
5. Fiscal crises
7. Unmanageable inflation
9. Illicit trade
10. Failure of financial mechanism or institution
Source: World Economic Forum, Regional Risks for Doing Business in 2018
While the pronounced concern about economic, technological and geopolitical disruptions reflects the dependency of many countries in the region on natural resources, and that the region houses existing political and societal divides, the lack of climate change priorities suggests a blind spot among stakeholders when it comes to considering the risks of the issue to the region. The results of climate inaction will become increasingly clear – the region is already experiencing more extreme temperatures and rising sea levels. The oil-based economies of the MENA region will also face second-order risks as other countries around the world switch away from fossil fuels to reduce their reliance on fossil fuels to stem the effects of climate change.