Business outlook for 2012 less optimistic - ContinuitySA

"However, that now appears to have been optimistic. The global economy is not recovering as quickly as hoped and our currency continues to be volatile - in fact, on balance, we think that the risks of social and political turmoil have actually increased. The danger is that hard-pressed companies may be tempted to cut spending on business continuity. Given the risks and the new Companies Act, that's exactly what they should not do," says Michael Davies, managing director of ContinuitySA, a provider of business continuity and disaster recovery.

"The good news is that the rapid maturation of business continuity hosting is making a much more sophisticated offering available. By tapping into the infrastructure-as-a-service model, companies can now begin to turn business continuity capacity from a dormant asset to one that generates value for the IT environment."

Davies and his team at ContinuitySA have identified what they believe are the most important issues facing business in 2012 that are likely to impact on business continuity strategies.

Unemployment creates a climate for crime

Last year, it seemed as though the economy might be coming out of the recession, but now the talk is all about the dreaded double dip. Economic hardship is exacerbating social and political tensions, especially as retrenchments swell the hordes of unemployed. Too many people without work or the prospect of it places a huge burden on the state, provides the climate for crime and is likely to fuel tension between rich and poor.

Ongoing service delivery and corruption issues have continued to fuel widespread social unrest. Some commentators are even talking about popular uprisings comparable to those that occurred earlier in the year in North Africa. Instability in the ruling party continues to unsettle political and social life, and this will only get worse as the ANC's leadership conference approaches. Meanwhile strikes and social protests seem to be getting more prevalent. For business, one direct consequence is frequent work stoppages, with staff actually finding it hard to get to their places of work.

Volatility of the rand destabilises capital movement

Water security remains a problem in this country, exacerbated by the pollution of our existing water stocks. Although the government finally woke up to the problem of acid mine drainage and made R400 million available, media reports indicate that little action has actually occurred. If substantial progress is not made in finding a solution, the acid water is expected to begin decanting into the Johannesburg basin in March 2012.

The risks mentioned will continue to weigh on risk-averse foreign investors, while the volatility of the rand will encourage destabilising capital movements. The socio-political challenges are also taking their toll on the outlook of local business. With the business confidence index declining, investment in equipment and people will be curtailed at a time when they are more necessary than ever. Militant unions and demands for increases that are significantly above inflation are further worsening the business outlook.

Promulgated during 2011, the new Companies Act has made the directors of companies personally liable for the outcome of their decisions. The legislation is new and untested, making compliance even more risky than it might otherwise have been. In combination with the recommendations of the King Commission, the new act has made risk management a much more important item on the board agenda, and this includes IT risk.

"The outlook is less optimistic than it was 12 months ago, and the ANC's leadership conference during 2012 will unfortunately distract government's attention from its real job. On the positive side, companies that understand the risks can plan accordingly - and troubled times also create tremendous opportunity for those with their wits about them," concludes Davies.