Doing business in Latin America. The same risks as 2018 continue to challenge business leaders throughout the region.
By Claudia Dill, CEO Latin America & Member of the Group Executive Committee, Zurich Insurance Group.
The Regional Risk for Doing Business Report 2019 shows that the business community in Latin America is worried about many of the same risks that challenged it in the previous year.
The World Economic Forum releases this yearly report in partnership with Zurich to highlight the top 10 risks of doing business in the region.
It is not a surprise to me that risks continue to be much the same and appear in the same order as in 2018. We are, in general terms, in agreement with the report and the view of the business community.
The report does raise questions. Why do business leaders consider that the failure of national governance ranks No. 1? Why is this happening in Latin America?
I believe that a lack of predictability and a long-term vision in governments generate a sense of uncertainty and instability. The reality is that the region still has serious social issues that could be summarized as inequality and poverty. There are unacceptable gaps in access to formal jobs, education, health, internet connectivity, unemployment and under-employment, water supplies and other public utilities. There remains a deep and unjust distribution of wealth. This varies country by country but, in general, the region has not yet resolved social issues that continue to affect a substantial portion of the population.
We see buckets of sustainable development and social well-being here and there. However, the region still has a pending list of structural reforms to build on the Rule of Law and democratic legal framework that, in general terms, is something that the region has been able to achieve in the last couple of decades. Now is clearly the time for achieving social development and economic growth for the larger population and not just for a very few and selected clusters. That is, in my view, the serious and long-term pending issue this region still faces. The Rule of Law and the democracy developed over the last few decades are the basis and foundation on which countries (government, civil society and private sector) need to build to take the region to its next level. There is still a significant need for a better and more stable legal (regulatory, tax) framework that promotes and boosts local and foreign private investment in infrastructure and services. The region offers a special combination of unique natural resources and a diverse set of talent with an interesting mix of cultural background and experience.
From a business management perspective, however, I still believe that the main risk continues to be the lack of understanding – from our part, from the business community- that volatility is part of the environment of this region. Lack of understanding that the region is diverse; each country has its own peculiarity. The lack of understanding that we need to have a long-term view when investing in the region. That we need a special set of leadership skills, talent and capabilities, the know-how to manage and deal with different local realities. Plug and play does not work. Global formulas and approaches are not always the right ones for the reality the region faces. Zurich’s experience in the region goes back more than five decades, a history of servicing customers and distributors with a wide range of insurance solutions and services from a large geographic area.. Does that mean we know everything and that we do not find challenges? No. It simply means that we are prepared to manage volatility and uncertainty. We do it with people and teams that have a clear understanding, ability and deep knowledge of local realities. To all that, we apply our strategic thinking and approach as well as our values and behaviors. We are committed to Latin America for the long run and are fully convinced of the possibilities the region offers, as well as the role we play as an insurer and social agent in the creation of a better, more stable, more just and sustainable society.
From Claudia Dill, CEO Latin America, Zurich Insurance Group
