x Abu Dhabi, UAESaturday 22 July 2017

A warning to expect even the inconceivable in business

Here's how executives can better prepare for unexpected business disruptions.

More executives need to expect the unexpected, experts warn.

From the uprisings in the Middle East and North Africa region to natural disasters that have shaken Japan and New Zealand, businesses around the world are increasingly encountering so-called "black swan" events, challenges that exceed what is normally expected and are especially difficult to predict. Here is what the experts recommend:

Consider the effect

A new study from the consultancy Deloitte & Touche asks executives to consider how much a periodic or sustained disruption could affect their organisation. Some of the sample situations include operating a business in the Middle East without telecommunications, air travel or the ability to distribute products or services.

Prepare relocation plans

More companies should consider creating relocation plans in case turmoil were to disrupt business. "A lot of companies that have had businesses in Egypt are relocating to many parts of the Gulf," says John Sfakianakis, the chief economist at Banque Saudi Fransi. "Businesses in Bahrain are relocating to Qatar and Dubai."

DHL Express, for one, recently moved its air operations for the Middle East from Bahrain to Sharjah for one week.

Crunch the numbers

Most chief financial officers (CFOs) in the Middle East are optimistic about their capacity to service debt, although bank failures and new regulations will continue to limit the availability of capital, Deloitte warns.

It's best to work out a number of "what if" scenarios, experts recommend, especially given that 37 per cent of CFOs in the region believe financial risk has increased over the past 12 months.

Look out for opportunities

After unrest in this region and disasters in other parts of the world, governments have begun reinvesting heavily in their economies.

Companies that position themselves the right way may be in good position "to participate in this bonanza", says Mr Sfakianakis. "They're bound to gain from this, rather than lose."

nparmar@thenational.ae