The theme for this year’s
annual meeting of the World Economic Forum which was ‘Mastering the Fourth
Industrial Revolution’ was rather brave! Brave considering the backdrop of China’s
economic slowdown, rock-bottom oil prices, fear of an impending economic
recession and growing threat of terror groups. The most critical word in the
theme seems to be ‘mastering’. For a business to sustain till the fourth
industrial revolution it needs to be master the art of managing risks.
I would like to draw your
attention to 5 key observations that Indian businesses need to take note of:
The Inequality Challenge
Oxfam launched a report just
before the Davos meeting showing the alarming levels of economic inequality in
the world. A recent IMF report states that income inequality impacts growth and
its sustainability. The report also suggests that the poor and middle-class
matter the most for growth. The Global Risk Report launched by the World
Economic Forum shows that ‘Profound Social Instability’ is one of the most interconnected
risk for the world. The report also shows
that the trend of rising income and wealth disparity is a key factor for
profound social instability.
As part of the Global Risk
Report businesses worldwide ranked unemployment and underemployment as the top
risk and profound social instability as the fifth highest. This suggests that
businesses worldwide acknowledge the inequality challenge. However, Indian
businesses feel that profound social instability is the 3rd
least important risk while unemployment and underemployment rank 18th.
This could mean two things – either Indian businesses are better prepared to
mitigate these risks in comparison to their global counterparts or they feel
that the Indian economy is immune to these risks.
The Health Risk
Two sessions at Davos
discussed the global health challenge and our preparedness to face the next
epidemic. The world had barely recovered from the Ebola crisis when the Zika
virus outbreak has hit. These epidemics challenge the preparedness of health
systems globally. Ebola outbreak exposed the fragile
health-care systems in Africa. In
addition to the tragic loss of human lives the Ebola epidemic knocked off an estimated
$805 million from the GDP of 3 most affected countries. Businesses having
exposure in the Western Africa region (especially travel related) faced
business and market losses.
Surprisingly businesses
globally and in India do
not think that the spread of infectious diseases is a major risk. This risk
is associated with trends like climate change and urbanisation which are
evidently very high in economies like India. As per WHO data infectious
diseases (including HIV, TB and Malaria) are among the highest causes of disease
burden in India. The probability of prospering Indian businesses is contingent
to the well-being of its future workforce, consumers and suppliers.
The Gender Gap
There seems to fair
consensus on the economic significance of plugging this gap but with little action.
As per the Global Gender Gap Report 2015, at current pace of change the world
would close the economic gender gap by the year 2133. Of the 2,500 participants
at Davos this year only 17.8 were women as reported in an article.
India
ranks 108 of 145 countries on the Gender Gap Index. Its rank falls down to
139 in the economic category. Indian businesses have a lot of catch to do to
close the economic opportunity gap between men and women. A leading business
newspaper in India recently hosted its annual corporate excellence awards which
failed to find even one woman worthy of an award.
The fourth industrial era will
be a different place and would need a different business paradigm. Pierre
Nanterme, CEO of Accenture said at Davos “Digital is the main reason just over
half of the companies on the Fortune 500 have disappeared since the year 2000.”
Ability to convert risks into opportunities could perhaps define businesses of
the new era.
Originally published here - https://www.oxfamindia.org/featuredstories/1391
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