This week I attended the EGYPS show in Cairo, Egypt. It provided time to talk to current customers operating in Egypt and the region and new incoming companies looking to enter the region. I desired to understand and educate about how companies can minimize risk and mitigate security liabilities in the wake of challenging global economic conditions. With our current trend in dealing with historically high inflation metrics, ongoing global market turmoil resulting from the Russia/Ukraine conflict, poor global financial governance of nations, and record lows in consumer confidence, it's an understatement to say that the economic outlook is somewhat shaky.
What we have seen is that companies and governments are in fear. Africa and the Middle East are experiencing a slowdown in the rise of inflation and a strong job report but poor fiscal management on behalf of governments. From what we have seen and spoken to, all conversations and data indicate that the economic turbulence might not tumble into a full-on recession, but economic uncertainty remains a significant challenge for business decision-makers.
Inflation, rising labor costs, and staff shortages.
A challenging labor market complicates the matter for companies, with much-needing help filling critical roles and dealing with a tricky combination of a shallow labor pool and qualified candidates making higher salary requests in response to rising costs. From a security standpoint, the fact that real wages have fallen dramatically increases the risk of crimes of opportunity, which tend to rise during times of financial strain. Theft has also been in the news and front and center in more significant numbers, and we are seeing telecom, banks, and even sorry to say, services companies making news because so many of their customers simply aren't paying their phone bills or paying eight months later.
Gloomy inflation expectations are potentially even trickier to manage because of their impact on consumer behavior and the inducement of fear. Skyrocketing inflation and economic belt-tightening aren't just a snapshot but an ongoing phenomenon. People behave differently today based on their expectations of what will happen in the future. And, whether it's demanding more money in anticipation of future price increases or not accepting initial offers because they expect inflation to continue to increase, those changes have an impact.
Any industry where discretionary spending drives the market is particularly vulnerable to inflationary pressures and economic uncertainty. Manufacturing companies and others that operate with long lead times and are unavoidably locked into prices where inflation can cut deeply into their margins are also vulnerable.
The risk to consider is economical and, consequently, societal uncertainty. Uncertainty is destabilizing. Uncertainty is stressful. And uncertainty is also really just another word for social risk.
Human-Centered Business
What should companies do in this environment to adjust their plans, minimize risk, and prepare for what lies ahead?
Distribute
Prioritizing spending is more important than ever. It's vital to be more thoughtful about how and where to distribute scarce resources concerning mitigating risk, optimizing security, and minimizing exposure. Prioritize security spending to address vulnerable areas where inflation-related issues are most likely to impact your business. Anytime the economic landscape changes this significantly, contours on the risk landscape shift.
Calculate
To inform smarter spending:
Do your homework.
Look critically at how inflation affects your community, industry, and business model, paying particular attention to newly emerging or newly elevated risk areas.
Adjust your security policies or operational priorities accordingly.
The best way to make that happen is to partner with an experienced security partner with the tools to help with everything from hiring to risk mitigation and provide real insight into the social risk. The best security providers can help bring into focus not just the big picture regarding inflation but specific details about how that translates to increased risk for your people, facilities, and assets. They can use the ability to be on the ground to provide you with accurate ground truth that enables them and you to drill down into specific areas (both geographically and within the business) where social risk might be more of an issue in a high inflation environment. It's a meaningful way to maximize scarce resources in security and risk mitigation and allocate precious resources to wherever the most acute problems (or potential problems) might be.
Connect
Clear and consistent communication is critical during times of economic uncertainty. Too many companies need to appreciate the full extent of the angst and doubt their people are experiencing. Transparent and open human-to-human connections and conversations show empathy, concern, and understanding is one of the best ways for organizations to mitigate that concern and uncertainty. If employees understand how the company is managing this moment, they will generally be more confident and secure and less likely to do something dramatic. Top-down communication doesn't have to be super specific — simply acknowledging the problem and affirming that you understand the impact on your team (beyond just the company's bottom line) goes a long way.
Social risk and expectations
Between inflation, inflationary expectations, and a decline in real wages, companies are struggling with economic headwinds they last grappled with in a very long time. It's incredibly complex, fluid, and unpredictable, with things changing not just weekly or even daily but sometimes hourly.
Thriving in this environment requires flexibility, agility, and making significant strategic and tactical decisions virtually in real time.
That's always challenging, especially for big companies. It's incumbent upon business leaders and decision-makers to recognize that degree of uncertainty and make intelligent investments in mitigating its impact on their business — and on the mindset and behaviors of consumers, employees, and professional partners.