Protecting Your Business: How Do Operational Risks Affect the Growth of Your Business in MENA?
What is operational risk? It’s the prospect of a loss as a result of inadequate or failed systems, procedures or policies.
You may feel like your business is running smoothly but operational failures can arise unexpectedly and cause serious consequences that ultimately result in business interruption.
By learning about the operational risks that your business faces, you can ensure protection against them and focus on future growth.
What Causes Operational Risks in the MENA Region?
- Supply Chain Issues
Companies today do not operate in isolation, they are part of complex networks with intricate supply ecosystems, all critical to optimal business operation. Together, with the rising cost of warehousing, many more businesses are facing threats to operations due to inefficiencies in their supply chain.
- Geopolitical Environment
The geopolitical landscape is becoming uncertain in some regions and countries across the world. In a dynamic business background, the nature of the events are unpredictable, which can lead to unforeseen operational failures.
- Climate Inaction
Inaction against climate change can cause a number of operational risks for businesses in the region. As countries around the world take steps to reduce their dependence on fossil fuels, countries in the MENA region are diversifying their economies to become more market led.
Data breaches, cyber extortion and notification costs are a few of the many unfortunate consequences of growing cyber threats within MENA. Urgent action must be taken because technological risks inflict critical damage that disrupts the smooth operation of businesses in almost all industries.
For businesses today, the risk environment has become increasingly complex and interconnected. The dynamic business landscape of the MENA region is shaped by what happens at a local level but is also deeply influenced by the global risk environment. This is what we call a “glocal” perspective – a point of view that accounts for both global and local assessments.
With cyber-attacks and fiscal crises top of mind for business executives globally in 2019, according to the World Economic Forum – the question is how do businesses protect themselves against operational risks for future growth?
With experience in diverse industries in the MENA market, Marsh has identified effective ways to protect your business against operational risks in the region.
- Improving Operational Efficiency – By continuously striving to reduce costs with no reduction in quality, businesses can improve efficiency. Sensible practices such as supply chain optimization and enhanced data management guarantee low operating costs, so the impact of an unexpected operational risk will be lessened.
- Smart Hiring – Having employees who follow good protocols leads to reduced system/process breakdowns and in turn fewer operational errors.
- Action Plans – Planning ahead can save your business from serious operational failures. By Identifying potential operational risks and preparing an action plan that you can follow will enable you to minimize damage.
- Mindset Shift – Perceive operational risk as an opportunity to become better at taking more calculated risks, a chance to improve operational efficiency and in turn encourage business growth, instead of just a way to avoid risk.
Operational failures lead to business interruptions, which can cause serious liquidity issues, potentially harming a business’ reputation and affecting its bottom line. This can significantly increase financial risks for your business. Learn more about financial risks for businesses in the region.
Business interruption insurance is growing in importance as the loss of critical business functions can impact a company’s operational, financial and corporate standing. Specifically-designed insurance coverage compensates companies in the case of business interruption to prevent operational failure and financial loss.
How Insurance Brokers Enable Operational Success
Experienced insurance brokers will provide you with a holistic view of the operational risks facing your business. They will also act in your best interests and play a key role in the strategic growth of your business, namely helping you to protect your organization against operational risks and enable future growth. In order to capitalize on the value of your insurance broker, you should engage them for the following:
Risk transfer and insurance market expertise
The independence of a broker enables them to leverage both global and local relationships with trusted insurers and find best value, client centric solutions for your business.
Expert Industry knowledge and expertise
They will also provide you with expert industry knowledge and have tailored solutions, specially created to mitigate against your industry’s unique risk landscape.
Good insurance brokers don’t just execute contracts, they offer exceptional claims support in order to achieve the optimal result for you and your organization. They will be able to support you in the moments that matter.
Many operational risks are beyond our control, but we can choose how to react to them. Organisation resilience is in part determined by a company’s ability to respond quickly to threats that are critical to business success. Ensure your business is empowered to mitigate and transfer against these risks so you have peace of mind and can focus on growth.