Global Investors’ Risk Perception

Sorted from ten to one by global investors every year, the risk factors or their priorities do not remain stable. While top items like “climate change” or “close combat” keep holding key importance, new risk factors are adding up to the equation.

For instance, last year, Trump decisions and Syria were our top two priority issues. Then, Brexit arose and finally trade wars took top place on global risks list.

The challenges which are defined by global companies as “Top 10 important risks” are a bit different today. Just like we were shocked to see the recently released unemployment data in Turkey, I can notice that global companies seem to be horrified by the growing rate of unemployment; because, as the number of jobless people keeps increasing, it’s getting more and more difficult for producers to sell their goods and services. The overall demand is gradually decreasing. Therefore, “unemployment” is the number one reason that causes disruption in doing business.

The second risk that terrifies the investors the most is the “governance problem”. Management weakness in the Government and its failures to properly/effectively handle problems, disruption in separation of power are among the most frightening risks. If energy prices start to rise to top it all off, then we should definitely expect overall business to stop.

The “financial crisis” that we have all forgotten about since 2008-2009 crisis is sitting in the 4thplace on the list. This threat makes people think that a new wave of crisis arising out of or in connection with public finance and debts will cause the system to collapse. Interestingly enough, although recognized last year but failed to make the list, “cyber-attacks” sit in the 5thplace.

According to global investors and business people, growing social disturbance is one of the main threats to business world. Another serious risk that stands out is a possible disruption to payment and monetary-loan mechanisms or institutions that carry out such functions. There’s also the risk of progressive collapse in critical infrastructure including transport, communication, energy, water etc.

“Can the investors make the right decisions?”

The last two articles involve weaknesses in regional and global governance and “terrorist attacks”.

Accordingly, I think I wouldn’t be wrong in saying that the 10-item list helps us figure out whether foreign investors do really make the right decisions or not.

The situation in Turkey is a living proof of the presence of one of the two growing concerns mentioned above: “unemployment”. Although the Government is currently facing governance problems, it can’t be considered a “risk”. Government’s weaknesses can get worse if final election results do not come in soon. A possible deviation from the principle of the separation of powers poses a serious risk to investors.

Fragility of Turkish economy against trends in energy prices is an undeniable fact. Turkey also has weaknesses in public finance and they are getting riskier every day. No serious threat regarding Cyber Attacks seems on the horizon yet and nothing to cause concerns in the business world either. Payment mechanism and monetary-loan system work fine. We have nothing to concern about critical infrastructure. Turkey is doing the best it could in terms of Global and Regional Policies yet it is a fact that they involve some risk elements. Terrorist attacks, on the other hand, are sadly on the rise everywhere.

In short, Turkey seems as a low-risk country according to this list. However, some of the risk elements on the list are about to become a reality. If Turkey finally manages to offer the world an acceptable narrative, this would make life a whole lot easier.

For this very reason, I think we should provide investors with clearer, more precise and spot-on presentations. Maybe, we could start with a strong attempt to prove our faith in market mechanism and democracy.