By Claudia Dill, Chief Executive Officer Latin America
The main risks identified in the recently released 2018 “Regional Risks for Doing Business” report from the World Economic Forum in partnership with Zurich are essential considerations to how we do business in the region.
However, what's the main risk? In my view, it is the lack of understanding that volatility is part of the environment of this diverse region, where each country has its own particularity. It’s also a lack of understanding that we need to have a long-term view. And how should this be addressed? How should we invest in such a context and expect a reasonable return on equity in a reasonable time frame? We do not have all the answers, but our experience in the last three-and-a-half years allows us to share some guidelines that might be of interest and of use for others to follow:
- Having the right set of local leadership skills, talent and capabilities, with the right mindset and attitude, is key. You cannot simply plug and play Global ways of doing things. Global needs to understand Local and to do that it needs to have the right people in place and empower them.
- Understand that investments need to be looked at with a long-term view. Be patient. Build the right set of capabilities first and then invest in growth initiatives, either organically or inorganically, depending on the speed defined.
- Combine global expertise, knowledge and structure with local know-how, in particular on volatility management. Global and Local need to work together in a collaborative, professional and respectful way.
At Zurich, we have been doing business and servicing customers and distributors in Latin America for more than 50 years. We know how to manage volatility and uncertainty. We have the right set of capabilities and attitude, with an aligned set of values and professional standards.
The different markets are still developing and are in different stages of maturity. The rule of law governs the majority of the countries and although institutions in general are still weaker, there has been a good amount of progress in the last couple of years in terms of maturity and development of society. Citizens feel empowered and have come to a much deeper understanding of their role in pushing cultural and transformational change. Brazil and Argentina are examples of this, where the recent cases of corruption are being finally brought to trial and the Judiciary is playing an active part.
I believe that the region shows the sufficient macroeconomic and social framework to continue attracting investments with a long-term view. It is indeed a potential growth engine for global companies like ours for several reasons. We are very happy and excited with our operations in the region and the progress of our businesses there, especially with the future potential of our recent acquisitions in several markets. We are confident that Latin America shows the conditions to support continue investing in capability building and growth initiatives.
For a look at risks in other regions, read these blogs by my colleagues or read the full report.