Doing business in Latin America

According to the World Economic Forum Regional Risks for Doing Business Survey, the business community in Latin America continues to show similar concerns when identifying and pondering the risks for doing business in the region, all of them amplified by the unprecedented global scenario derived from the Covid-19 pandemic and its deep sanitary and economic consequences.

Same as in 2019, business leaders consider the failure of national governance, profound social instability and unemployment or underemployment as the major risks across the region.

The challenges that governments face to drive sustained social development in the long term and the lack of predictability (derived from a series of geopolitical, historical, economic, financial and fiscal reasons) seem to generate a general sense of uncertainty and instability. This affects not only the business leaders’ mindsets but also individuals and families, as there are several social and infrastructure problems that have not yet been resolved.

Access to good education, access to health services, low internet connectivity, limited digital penetration and reduced water supply systems are some of the long-standing unresolved issues. This scenario creates an unjust equation and an unbearable gap between the rich and the poor, while it also creates a significant impact on the raising - and now strongly impacted - middle class who has been suffering the aftermath of the pandemic.

It is also worth mentioning that a series of up-coming elections in 2021 in several countries (mid-term elections in Argentina and Mexico, national general elections in Bolivia, Ecuador and Peru, and the Constitutional referendum in Chile, among others) and its unpredictable results and risks may have influenced the opinion of the business leaders when responding the survey.

Finally, and in line with the global trends in many other regions, the spread of infectious diseases has naturally grown as one of the most relevant risks for doing business in Latin America. The risk has increased 24 points to become a top 5 risk and a dominant topic in any business discussion.

However, it is also worth mentioning that leaders have not identified cyber and terrorist attacks as critical risks, whereas these threats appear as top five in other geographies.

To address these issues from a business management perspective, it is key that leaders understand that the VUCA rule (Volatility, Uncertainty, Complexity and Ambiguity) applies to this region by definition.

Volatility and diversity of realities (each country has its own individual identity) are part of the natural environment of Latin America and therefore having a long-term view as well as applying targeted strategies when investing in the region become key differentiators and must haves.

Apart from the risks, this region offers unique opportunities for business growth and development. The middle and affluent class, although affected by the pandemic, is still increasingly demanding even more sophisticated products and services to cover their new or renewed needs. In addition, natural resources are matched with a very diverse matrix of talents that stand out for remarkable innovation and creativity and an entrepreneurship attitude and mindset.

At Zurich, we feel that we have the ambition, the spirit, experience and resources to continue servicing our customers and distributors in Latin America as we have been doing during the last five decades. We may not have all the answers, but we have what it takes to manage volatility and uncertainty.

Our teams have a clear understanding, ability and deep knowledge of local realities. This makes us feel confident that our commitment to the region is for the long run as we are fully convinced of its opportunities. We want to play our role not only as an insurer but also as a social agent in the creation of a brighter future that results in a more just and sustainable society.