Global Business Risk Report Q1 2022

Key Global Risks for Businesses

The Dun & Bradstreet Global Business Risk Report (GBRR) ranks the biggest threats to business based on each risk scenario’s potential impact on companies, assigning a score to each risk. The scores from the top ten risks are used to calculate an overall Global Business Impact (GBI) score.

Our latest GBI score increased to 297 in Q1 2022, following a deterioration in the risk environment, indicating that the outlook for doing cross-border business remains relatively challenging.

Global Business Impact Score

Global Business Risk environment has deteriorated over Q4 2021

In Q1 2022, Dun & Bradstreet’s GBI score increased to 297, up from 288 in Q4 2021 but lower than the recent highs of 332 experienced in Q2 and Q3 2020. Although the GBI score is below the levels seen throughout 2020, it remains above the long-term average of 267.6; businesses operating cross-border continue to face high levels of uncertainty.


Our top ten risks are based on the expertise of Dun & Bradstreet’s team of economists, who monitor 132 countries - accounting for over 99% of global GDP. They assess the key risk scenarios emanating from their region or pan-regionally. The Global Business Impact (GBI score) of each risk scenario is calculated by combining an assessment of: (i) the magnitude of the event’s probable effect on the global business operating environment, on a scale of 1 to 5 (where 1 is the smallest impact and 5 is the largest); and (ii) the likelihood of the event/s happening (out of 100). The maximum GBI score for each of the 10 risk scenarios is 100, and therefore the maximum possible score for the overall GBI is 1000. In the report, each risk scenario is categorised into a broad Risk Theme for both the purpose of tracking and ease of presentation.

Geopolitics, Inflation and COVID -19 prominently feature among Top Risks        

Of the top ten risks identified for this quarter, the military build-up at the Russia-Ukraine border is the most pertinent one for the global risk environment. This risk, identified in Q4 2021 as a possible scenario affecting EU politics, has since matured. With the threat of a limited Russian invasion now considerable, we are tracking this under an independent risk theme entitled Russia’s foreign policy. Global inflation, which was our top concern in Q4 2021 has slipped to the second spot; however, the risk scenario event-likelihood for this theme has increased since the previous quarter. Inflation continues to beat decade-highs, the Fed commentary has turned hawkish, and US interest rates could rise as early as March. After years of access to easy liquidity, highly-indebted emerging markets may be in for a rude shock to their balance sheets.

Top Ten Risk Themes

Cyber vulnerability has also entered the list of our top ten worries for this quarter. This is driven by two factors - first is a widening gap between the pace of digitalisation during the pandemic and companies’ abilities to ramp up cyber capabilities. The second factor is an increasing propensity by state and proxy agents to target private organisations to settle geopolitical scores. In a bid to avoid kinetic conflict, geopolitical competition has moved to the cyberspace as an effective way of gaining strategic advantage through data theft, or as a means of inflicting economic pain. It has replaced energy crunch as a top risk from the previous quarter. 

Entering its third year, the Covid-19 pandemic continues to dominate as a risk theme. The role of vaccines, new and experimental rules of inoculation, and the pursuit of zero-Covid at all costs mean supply-side bottlenecks, growth scarring and rising prices will continue to feed a yawning gap among global populations. While early signs point to a world able to survive swelling waves from the recent Omicron variant, the political implications could ripple for years to come. 

Inflation: The Fed turns hawkish

For over a decade following the global financial crisis, central banks in developed markets have
been grappling with a lack of healthy price increments. The pandemic has disrupted that, with consumer and producer prices hitting multi-decade highs. These price rises have been sustained by
a demand-supply mismatch in goods and commodities, and by persistent disruptions to global supply chains, enough for the US Fed to turn decisively hawkish in its most recent commentary. The Bank of Japan too has raised its inflation forecast (though still below its target of 2%). In a tight labour market, a wage inflation spiral could quickly set in. Sustained price rises remain a common driver of at least two risks in our list of ten risks identified for Q1 2022:

1)      Global inflation: With the US Fed now decisively taking a hawkish tone, the likelihood of multiple rate hikes, starting as early as March 2022, has increased. This means that emerging market sovereigns and corporates will see a sudden surge in their debt servicing costs as international liquidity recedes and domestic rates rise to keep the risk premium intact. As we see default rates rise (at-risk sovereigns include Sri Lanka and Pakistan), nascent growth recovery could also be at risk. This is a key risk with a GBI score of 45.

2)      Political polarisation: A combination of food and fuel inflation, together with a significant rise in long-term unemployment may prompt anti-government protests, especially in authoritarian countries. We highlighted this risk in the previous quarter and the street protests in Kazakhstan at the start of 2022 may herald more such unrest ahead. While the Kazakhstan protests were quelled with external help and an elite compromise, businesses should prepare for more such disruption to economic activity. Such protests would be even more disruptive if they were to hit economically important urban centres in other authoritarian regimes. Additionally, high prices eating into people’s incomes could turn incumbents facing elections in emerging markets into populists, increasing policy risks for businesses. The GBI score for this risk is assessed as 21.  

Covid-19: An Unsyncronsied Recovery

In the third year of the pandemic businesses are still struggling to return to normality. There are significant uncertainties including the risk of resurgent waves, deadly variants, rising defaults and insolvencies, a change in politics and divergent economic trajectories on the path to recovery. The US and European countries with high vaccination rates are witnessing record number of infections due to the Omicron variant, albeit with lower hospitalisations and mortality rates. On the other hand, Asian countries such as China remain committed to achieving zero-Covid cases by keeping their borders shut, with little evidence that it will work against the highly-transmissible variant. This unsynchronised nature in terms of handling the pandemic will keep businesses guessing. We have identified three related risks in our list of ten risks:

1)      Resurgent Covid-19 waves: The Omicron variant has thrown a spanner in the works for the global economy, which was finally turning the corner on the pandemic. In its third year, Covid-19 is far from over. Initial signs suggest that despite being highly transmissible, the Omicron variant is not as deadly a variant. However, it is a good reminder for developed countries that vaccinating their own populations is not enough. Africa, with its low vaccination rate, could well become the source of another variant. Also, not all vaccinations offer the same degree of protection; as the scramble for booster shots begins, this vaccination divergence among populations could widen further. Another level of divergence is in response to subsequent waves of infections. As the appetite for domestic movement restrictions is decreasing, countries are opting to abruptly shut international borders instead; China is pursuing zero-Covid cases. This means that global recovery will be slow, tourism-dependent economies will continue to suffer and supply chain disruptions will persist. We assign a GBI score of 35 to this risk. 

2)      China’s economic slowdown: China’s insistence on a zero-tolerance policy to Covid-19 has necessitated sealed borders and on-off disruption to business activity. This poses the biggest risk to the economy, which showed signs of a slowdown for the second consecutive quarter in Q4 2021. Evergrande’s widely anticipated (and now official) default materialised, without turning into an economic catastrophe, and the energy crunch that shuttered factories has largely abated. But, unlike in the past, the property sector will be unable to fuel Chinese growth on unbridled leverage. Moreover, this quarter may see more planned and unplanned shutdowns due to the Lunar New Year and the 2022 Winter Olympics. Chinese growth will slow down, and while policy support has been deployed and will be ramped up, its aim will be to stabilise growth at a lower level. This will have far-reaching effects on economies that have come to rely on Chinese demand for their exports. As the only large economy to avoid a recession in 2020, and as the driver of global growth for the past two decades, an economic slowdown in China is a risk to global recovery. The GBI score for this risk is 30.

3)      Supply chain difficulties: The highly infectious nature of the Omicron variant has prompted lockdowns to return. While Asia has avoided the worst of this variant so far, it may not do so forever. Throughout the pandemic, from semiconductors to commodities, supply chain disruptions have been a common occurrence. This risk remains elevated in
Q1 2022. Worth highlighting specifically is China’s decision to pursue a zero-Covid cases strategy. This led to the lockdown of Xian, a town of 13 million people, for a month. The virality of Omicron suggests that this strategy may prove unsustainable, but China’s resolve also means that the factory of the world and its ports could shutter at short notice. The supply-side bottlenecks may not worsen from here on in, but businesses should also not expect them to disappear soon. The GBI score for this risk is 28.   

What This Means for Businesses

Dun & Bradstreet’s Global Business Impact score for Q1 2022 shows that the risks confronting businesses remain elevated, with the score rising marginally from Q4 2021, albeit below the record highs experienced in Q2 and Q3 2020, but above the long-term average. The risk of geopolitical conflicts and attempts to control the spread of continued Covid-19 outbreaks while mitigating the impact on business activity, sovereign finances and societal tensions, have elevated risks, illustrating how unexpected events can suddenly worsen the risk environment for businesses operating cross-border.

The Q1 2022 score highlights that business decision-makers need to have contingency plans in place for the sudden disruption of seemingly-secure supply chains and increase awareness of geopolitical developments. Furthermore, the geographical spread and diversity of the impacts in our top ten underline the importance of taking a broad approach to mitigating these risks.

Top 10 risks

Ranking Risk Risk Scenario Likelihood of Event (%) Global Impact (1-5) Global Business Impact Score (1-100)
1 Rusisia's Foreign Policy In a swift, limited military action, Russian forces enter Ukrainian territory in response to a supposed provocation. US and European sanctions on Russia follow. Global risk-off kicks in as markets are spooked by the prospect of a prolonged conflict amidst heightened rhetoric from Russian and NATO forces. Russian financial system is choked internationally, but Putin manages to claim an enhanced buffer zone and expose a lack of coordination among Western allies. 65 4 52
2 Global Inflation Monetary tightening by the US Fed begins in March, triggering capital outflows and increasing the cost of borrowing and debt servicing for corporates and sovereigns in the emerging markets. Global growth is stifled. 75 3 45
3 Resurgent Covid-19 waves Governments run out of ideas to control the spread of Omicron. Borders are abruptly shut and vaccination divergence among countries increases. Financial markets look past swelling numbers, but tourism-dependent economies continue to hurt. As the global response to the pandemic seems even more unsynchronised in its third year, businesses uncertainty remains high with the possibility of existing and new variants disrupting economic activity.  50 3.5 35
4 China’s economic slowdown China's insistence on zero tolerance to Covid-19 necessitates sealed borders and business disruptions. Policy support is ramped up but proves inadequate in the face of planned and unplanned shutdowns, and sustained property sector distress. China loses a quarter of growth, Asian markets and commodity-dependent economies feel the pain. 50 3 30
5 US-China competition Growing US concerns over China's military manoeuvres vis-a-vis Taiwan Region and in the South China Sea, and a rapidly-growing nuclear arsenal, forces another negative spiral of trade and technology restrictions. 35 4 28
6 Supply Chain Difficulties China maintains strict border controls, ports and factories are intermittently shuttered and supplies from the global factory remain broken, extending goods, batteries, and chips shortages well into H1 2022. Lead times remain long and unpredictable, producer prices remain high and are eventually passed on to consumers. 55 2.5 28
7 Political Polarisation Business disruptions resulting from public protests increase as elevated food and energy prices intersect with lockdown fatigue. While street protests in Kazakhstan dissipate due to lack of leadership, others simmer and erupt as incumbents facing elections and autocratic regimes watch on nervously. 35 3 21
8 Climate Policies  Confusion over the use of coal and the direction of energy policy in Europe and Asia leaves businesses in the lurch on investment decisions. Backtracking on climate commitments and differential trade treatment based on climate action becomes another cause of geopolitical tensions. 35 3 21
9 Cyber Vunerabilities
Geopolitical scores are increasingly settled in cyberspace. Beyond governments, private businesses that serve critical national infrastructure are targeted. Israeli, Taiwan Region, and US-allied businesses raise alarm bells. Smaller businesses realise that in the digitalisation push from the pandemic, they have left gaping holes in their cyber security. 50 2 20
10 Politics in the EU Italian presidential elections result in Mario Draghi leaving the PM's post, but a replacement is then hard to find. Prolonged uncertainty forces a repricing of European periphery debt. In the meantime, differences over energy security, lack of coordination over response to Russia and sustained frictions between Brussels and Poland/Hungary continue to strain European cohesion.   25 3.5 18

How Dun & Bradstreet can help

Dun & Bradstreet, a leading global provider of B2B data, insights and AI-driven platforms, helps companies around the world grow and thrive. As this report highlights, risks are ever evolving in terms of types and geographies and can also be unexpected. The impacts are felt across the business spectrum - from sole proprietors to multi-national corporations. What is different is the magnitude to which these businesses are affected. The key to sustain, grow and thrive during these times is to leverage data to turn risks into opportunity. We recommend that business leaders:

  1. Assess macro- and micro-level risks to maximise profitability with data, insights and automation
    • Monitoring country, sector and counter-party risks through reports such as this one can help businesses create better strategic plans to limit payment delinquency, guide cash-flow management decisions, and strengthen supply chain resilience.
    • D&B Finance Analytics and D&B Risk Analytics help automate some risk decisions, as well as accelerate supplier due diligence and help with compliance screening.
    • Our COVID-19 Impact Index and Recovery Index can also help gauge recovery in consumer demand, and business stability while highlighting potential growth areas.
  2. Keep pace with fundamental changes in your industry
    • The pandemic has accelerated changes that were already underway, such as remote working, the expansion of e-commerce and an increase in cashless transactions. Staying connected to meaningful changes is crucial in a climate of ongoing volatility and uncertainty.
  3. Maintain an integrated global perspective
    • A global view enables mitigation of emerging cross-border risks, and the ability to grasp growth opportunities, wherever they are, in a timely way.
    • Dun & Bradstreet’s Country Insight Solutions provide forecasts and business recommendations for 132 economies, allowing businesses to monitor and respond to economic, commercial and political risks in the markets in which they operate.