Global Business Risk Report Q1 2023

Key Global Risks for Businesses

  • The Dun & Bradstreet Global Business Impact score for Q1 2023 indicates that the risks confronting businesses continue to remain high.
  • The latest GBI score highlights that a risk of a global economic downtum and risks emanating from changes to the geopolitical order pose the biggest challenges to the global business operating environment.

The Dun & Bradstreet Global Business Risk Report (GBRR) ranks the biggest threats to businesses. Based on its potential impact on companies, a score is assigned to each risk scenario. The scores from the top 10 risks are used to calculate an overall Global Business Impact (GBI) score. 

Our latest GBI score decreased to 314 in Q1 2023, following a marginal improvement of the risk environment. While the GBI score is lower than Q4 2022, it is above the long-term average, indicating that the outlook for doing cross-border business remains challenging.

Global Business Impact Score


Global Business Risk Environment Has Improved in Q1 2023

In Q1 2023, Dun & Bradstreet’s GBI score decreased to 314, marginally below 323 in Q4 2022 but lower than the 2020 high of 332 recorded due to the pandemic taking shape. Although the GBI score is below the peak levels seen in 2020, it is above the long-term average of 274; businesses operating cross-border continue to face high levels of uncertainty.


Our top 10 risks are based on the expertise of Dun & Bradstreet’s team of economists, who monitor 132 countries/regions that account for over 99% of the 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 scenario’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, so the upper limit for the overall GBI is 1,000. In the report, each risk scenario is categorized into a broad 'Risk Theme' for both the purpose of tracking and ease of presentation.

Risk of a Global Economic Downturn and the Incumbent Geopolitical Climate Are Dominating the Global Risk Environment     

Nearing its one-year mark, the conflict between Russia and Ukraine is back on top of our risk radar for this quarter. Things haven’t gone Russia’s way over the past one year and both sides are now dug in, especially with Ukraine’s Western allies providing additional military equipment and funding. This makes a potential military escalation involving the use of higher-grade weapons and any inadvertent military accident involving a NATO member the key risks worth monitoring.

In Q4 2022, the world’s largest economies - the US, the EU, the UK, and Mainland China – were grappling with their unique economic challenges. Based on that, we had identified a synchronized Global Economic Downturn as the top risk to businesses for our Q4 2022 edition of GBRR. We still consider this to be among the most pertinent risk to businesses around the world, but a confluence of factors, including a better-than-expected winter in Europe, has reduced the likelihood of this risk scenario. More than overcoming a cyclical downturn, the real challenge for businesses is to navigate the divergence in the degree and depth of economic pain across markets. 

The risk scenario posed by US-China competition - a recurrent theme in our top risks radar - remains among the top risks for this quarter as well. Recent US efforts toward technology decoupling, specifically related to high-end semiconductors, has refocused attention to this risk, but the risk profile from this theme remains broadly unchanged over the previous quarter. 

Debt servicing in emerging markets remains a key risk to watch as several frontier economies across Africa, Asia and Latin America remain vulnerable to tighter global financial conditions. Even if we witness lower rate hikes or pauses moving forward, interest rates will likely remain in the restrictive region for a while. The longer they stay at these elevated levels, greater the chances to witness more events of debt distress in developing markets. The likelihood for this risk scenario has, therefore, marginally increased in Q1 2023.

Similarly, cost-of-living issues continue to fuel popular frustrations. Even as headline inflations drop, the scarring from higher prices of essential commodities throughout 2022 have been felt by the most economically vulnerable populations, seriously denting poverty reduction efforts. This has increased the likelihood that these frustrations may spill over to the streets in the near term, posing a risk to business operations, a risk we are tracking under the theme of social instability.  

Top Ten Risk Themes

Simultaneously, Mainland China’s decision to reopen fully has helped lower the likelihood of two key risk themes – China’s economic slowdown and supply chain difficulties. It is worth highlighting that the range of risk scenarios covered under these two themes continues to change, and in some instances, even widen. In Mainland China, Covid case numbers are still running high and while reopening will remove a key constraint to economic activity for now, consumer sentiment is likely to remain subdued. Several countries have also imposed more stringent testing requirements for arrivals from Mainland China, and in this quarter, a slowdown in activity around the Lunar New Year will also play a role.

Specific to supply chain difficulties, a reduction in lead times and container costs continues to depict lower supply chain pressures generally, but at the same time, labor activism, natural disasters, sanctions-linked disruptions, and even large-scale systemic failures - such as the one witnessed with the NOTAM system in the US - pose new challenges for businesses.  

Finally, three other themes - climate policies, cyber vulnerabilities, and resurgent covid-19 waves - remain among our top risks for global businesses without any change to their likelihood or impact over the previous quarter.Stagflation: the central banks’ fight for credibility

Global Economy: Holding Up Against the Odds of a Recession

We have still not crossed the critical Winter mark, but all signs indicate that Europe has managed through this winter better than many had expected it to. The weather has been kind to many. European firms held up better than expected to gas prices, industrial production didn’t take a significant hit, and the initial prints on GDP data indicate that UK and Eurozone economies may have escaped a recession in 2022. This is remarkable given where we were just a few months ago. At the same time, Q4 2022 growth for the US came in better than expected, with the key personal consumption component contributing positively. And in Mainland China, there was a shift toward fuller reopening, easing credit conditions for the property sector, and further steps to stimulate domestic demand. 

Unsurprisingly, over the past few weeks, the narrative on the global economy has shifted positively. Financial markets have already begun looking past the end of the monetary policy tightening cycle. We believe this optimism should be caveated. We are monitoring the following six related risk themes:

1.    Global Economic Downturn: The dominant story of 2022 was that central banks in many parts of the world found themselves catching up with inflation. For the coming quarters, the focus would shift to whether they will now go too far in terms of tightening. With a laser focus on inflation and with core prices still relatively high, there is a chance that central banks err on the side of caution but inadvertently trigger a synchronized global recession. And while Europe’s economic performance through the winter has given us hope, we still think this is a risk for businesses to watch. This risk of a global economic slowdown has a GBI score of 43, down from 51 in Q4 2022, when it was our top risk (the score ranges between 1 and 100; a higher score indicates a higher global impact).

2.    China’s Economic Slowdown: In Mainland China, 2022 real GDP growth at around 3% (estimated) was significantly lower than the average of preceding 5 years (above 6%, including the pandemic-stricken 2020). Further, it seems to have considerably undershot the pre-announced target of 5.5%. Unsurprisingly, authorities have reiterated that economic revival is the top policy priority for 2023. Apart from deploying credit support for the property sector, borders have been reopened and consumption vouchers are being issued across several provinces to stimulate domestic demand. There was also the first sign of a thaw in relations between Mainland China and Australia, as shipments of coal from the latter arrived in China for the first time in almost two years. The GBI score for this risk has decreased to 33 (vs. 36 in Q4 2022) with the policymakers’ renewed commitments to revitalizing growth, but China’s slowdown is also a function of structural factors such as demographics - Q1 2023 marks the quarter when India overtakes China as the world’s most populous country. 

3.    Supply chain difficulties: With Mainland China’s reopening, a key impediment to supply chain normalization in the post-pandemic world has been dealt with, but supply chains are facing newer challenges, which are wide-ranging - from natural disasters to large-scale systemic failures (e.g., NOTAM failure the US) and sanctions and export controls emanating from geopolitical considerations. As these risks materialize and intensify, supply lead times could remain unpredictable and producer prices could shoot up again, complicating the battle against inflation. The GBI score for the risk has reduced but is still at a high of 30.

4.   Social Instability:  Although prices of essentials have started to show signs of easing, cost-of-living issues remain front and center for populations that have suffered from the pandemic and now face poor economic prospects. Sustained high inflation may trigger massive street protests, especially in developing countries. Unrelated events - such as the women’s movement in Iran or political protests in Latin America - could galvanize populations suffering economically against their governments, disrupting business continuity and socio-political stability. This risk has increased over the quarter as new data indicates that 2022 was a year where global poverty reduction received severe setbacks, with a GBI score of 23 (vs. 20 in Q4 2022)..

5.   Debt Servicing in Emerging Markets:  Following Sri Lanka’s sovereign default, investor attention has turned to similarly vulnerable emerging markets. Sovereign balance sheets are reeling under multiple pressures with a weakening currency, rising interest servicing and refinancing costs, and higher subsidy bills on food and fuel. Public sector debt in emerging markets is particularly vulnerable to a domestic or external trigger event that could precipitate capital flight, moving closer to the next default event. Even in the absence of a trigger event, a weak economic outlook and a poor credit environment will keep financing costs for businesses high, hurting medium-term prospects. We assess the GBI score for this risk scenario to be at 20, marginally higher than 18 in Q4 2022.

6.   Resurgent Covid-19 Waves: In its third year, Covid-19 is fading into the background as a risk for businesses, but a cursory look at the case number around the world can tell us why it still finds a spot on our top risks radar with a GBI score of 19. We are still following highly contagious subvariants such at Kraken; moreover, hospitalization rates and returning mask mandates are points of discussion, along with stringent restrictions being placed on travelers from and to certain destinations. Mainland China’s experience indicates that reopening may at times lead to caseload spikes that attract news and while the world has mostly now accommodated to living with the virus, business operations have still not returned to full normalcy in terms of operations. 

Geopolitics: Managing Divisions in a Multi-Polar World

The conflict between Russia and Ukraine is still ongoing and the risks related to an escalation remain intact. February marks the anniversary of Russian troops entering the Ukrainian territory. Things haven’t gone Russia’s way over the past one year and both sides are now dug in, especially with Ukraine’s Western allies providing additional military equipment and funding. 

Europe’s price caps on Russian oil kicked in late last year. It requires traders using Western services such as maritime routes, insurance, and financing to pay no more than $60 per barrel for Russian oil. And businesses in the region are now preparing to abide by a complete embargo on crude and refined fuel imports from Russia by February 5, 2023. This is significant as it could alter energy trade flows permanently.

Meanwhile, the strategic competition between US and Mainland China continues to play out. Many global businesses may find themselves caught in the middle of this economic, financial, and technological tussle. Heightened rhetoric on matters of national security and sovereignty may potentially set into motion a series of actions with security implications in the Asia Pacific region. We are monitoring four risk themes related to geopolitics:

1.    Russia-Ukraine conflict escalation: The anniversary of Russia’s military action could become a key signpost for either side to showcase their resolve. We are mindful that as Russia begins losing leverage on energy prices, it could mount a strong second-round offensive targeting critical civilian infrastructure to psychologically wear down the Ukrainian population. On the other hand, an emboldened Ukraine could miscalculate and end up using West-supplied weapons in the Russian territory. Any sort of escalation poses a risk that tactical nuclear weapons are used, or a military accident pulls a NATO member directly into the conflict. We assign a GBI score of 48 to such a risk scenario, our top risk for Q1 2023. 

2.    US-China competition: Attempts at maintaining and reinforcing maneuverability in the seas may prompt larger and longer military drills in the region. Meanwhile, technology decoupling gathers pace through legislations. Use of sanctions - primary, secondary, and countersanctions - may increase. Lack of cooperation extends to North Korea's renewed missile program. And confusion on matters of security triggers an arms race in the Asia Pacific region, with South Korea and Japan working to boost their own capabilities. Further, a lack of cooperation in trade and climate matters would increase operational/continuity risks and compliance costs for businesses. With the latest export controls on high-end chips inflicting more damage on technology supply chains, and the fact that in a divided US government, a few things enjoy as much bipartisan support as a strong foreign policy stance towards China, the GBI score for this scenario remains at a high of 44.

3.    Climate policies: The now ‘revealed’ energy insecurity in Europe will hasten the global push to energy transition among developed countries with access to resources. On the other hand, highly vulnerable countries will be forced to prioritize keeping the lights on, with stop-gap arrangements such as coal. Increasingly, countries will fall in one of two groups: those that disregard or have reversed progress on climate targets and those that have accelerated toward it. While governments figure out priorities, businesses will continue to suffer uncertainty. With the EU working toward imposing carbon taxes and the US pushing to provide green subsidies, we expect environmental impact, energy mix, and carbon reduction to become recurrent features in board room discussions. We assign a GBI score of 33 to the risks related to changes in climate action policies.

4.    Cyber vulnerabilities: The cyberspace is a lower-cost and convenient battle ground for nation states at war with each other, and private companies can often become collateral damage in this battle. As geopolitical tensions soar, so do the threat levels in cyberspace. It is also noteworthy that the pace of digitalization during the pandemic has far outstripped the pace of upgrading organizations’ cybersecurity capabilities. Also, under sanctions, many businesses are shut out from access to critical technologies, which makes intellectual property theft a matter of strategic importance. We assess the GBI score for this risk scenario to be at 22.

What This Means for Businesses

Dun & Bradstreet’s Global Business Impact score for Q1 2023 shows that the risks confronting businesses remain elevated. Some risk scenarios have become more benign, but many risk scenarios have either worsened or stayed at the same level. Attempts to control the spillovers of a global economic downturn, geopolitical conflict, and supply chain shocks 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 with cross-border operations.

The Q1 2023 GBRR analysis 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 the global economic environment and geopolitical developments. Furthermore, the geographical spread and diversity of the impact in our top 10 risks underline the importance of taking a broad approach to mitigating these risks.

Top 10 risks

Ranking Potential Risk Potential Risk Scenario Likelihood of Event (%) Global Impact (1-5) Global Business Impact Score (1-100)
1 Russia-Ukraine conflict escalation Ukraine's counteroffensive unnerves Russia; at the same time, a warmer winter and the prospect of slowdown in global economy reduce Russia's leverage on energy prices. A divided government in the US slows down Western aid to Ukraine, and Russia ramps up its targeting of high-profile civilian infrastructure to psychologically wear down the Ukrainian population with a risk that tactical nuclear weapons are used or a military accident pulls a NATO member directly into the conflict. 60 4 48
2 US-China competition Mainland China aims to establish a new status quo with regard to its military maneuvers in the surrounding seas, and the US doubles-down on showcasing the strength of its own security alliances in the region. Japan, Australia, and South Korea continue to step up defense spending. Technology decoupling gathers pace through more legislations and a series of secondary sanctions/countersanctions. More countries join in a bid to ramp up international pressure. Lack of cooperation over North Korea's renewed missile program triggers a mini arms race in the region. Similarly, lack of cooperation in trade, investment, and climate matters elevates compliance costs for businesses. 55 4 44
3 Global economic downturn Excessive monetary policy tightening triggers a visible slowdown in the US; while European economies have performed better than expected, weakness ensues. China continues to suffer from domestic issues such as high covid cases and a weak property sector. The world is left without a growth engine and while recessions for individual economies may be shallow, they could trigger a synchronized, deep global economic downturn for the coming quarters. 50 4.25 43
4 Climate policies Europe's energy embargo on Russian fuels kicks in and changes global energy flows for good. Countries are split into two groups - one doubling down on fossil fuels and others doubling down on renewables. Confusion over the direction of energy policy in Europe and Asia leaves businesses in the lurch on investment decisions. Several businesses are forced to make costly decisions on input energy mix. At the same time, backtracking on climate commitments and differential trade treatment based on climate action becomes another cause of geopolitical strain. 55 3 33
5 China’s economic slowdown While the risk of sudden lockdowns has reduced, high number of Covid-19 cases keeps consumer sentiment weak. Economic policy support is ramped up but proves inadequate in the face of newer challenges from the global economy and a sustained distress in the property sector. The Lunar New Year also keeps manufacturing activity subdued. Policy focus aims to counteract the cyclical factors, but structural growth dampeners continue to dominate. Asian markets and commodity-dependent economies feel the pain. 50 3.25 33
6 Supply chain difficulties Disruptions from frequent shutdowns in China over Covid-19 cases are easing but are being partly offset by a series of supply chain challenges, ranging from labor shortages and activism across industries, to natural disasters and large-scale systemic failures (e.g., NOTAM failure the US). But supply chain risks emanating from geopolitical considerations emerge as a new threat for businesses. This includes a sweeping widening of sanctions and export bans or a deliberate crisis on energy, food supplies, or trade routes in Europe, the Middle East, or Asia created as part of pressure-tactics, which spiral out of control. Supply lead times remain unpredictable, and producer prices shoot up again. 50 3 30
7 Social instability Sustained high inflation may trigger massive street protests in developing countries. Peru has become the most recent example of popular frustration spilling on to the streets. Meanwhile, unrelated events - such as the women’s movement in Iran - threaten to galvanize populations suffering economically against their governments, disrupting business continuity and socio-political stability. 35 3.25 23
8 Cyber vulnerabilities Geopolitical scores are increasingly settled in cyberspace. Beyond governments, private businesses that serve critical national infrastructure are targeted. Increasing use of sanctions and export controls creates incentives to target intellectual property in order to advance national security and economic interests. As Ransomware as a service (RaaS) picks up pace, smaller businesses realize that in the digitalization push from the pandemic, they have left gaping holes in their cyber security. 55 2 22
9 Debt servicing in emerging markets Following Sri Lanka's sovereign default, the rising cost of debt servicing turns investor focus to the next debt distress event. Multiple pressures on public balance sheets in emerging markets make them a likely candidate (e.g., Pakistan). Commodity exporters also start to see revenues fall as global economic cues turn negative. Amid this investor unease, a domestic or international trigger initiates risk-off sentiment, setting the stage for the next default event. Regardless, higher financing costs and currency weakness trickle down. The credit environment worsens and investments take a hit, hurting medium-term business prospects.. 40 2.5 20
10 Resurgent Covid-19 waves The highly transmissible Kraken subvariant spreads around the world. Rising cases continue to make headlines across cities and regions, including from Mainland China, where relaxation of containment measures leads to a sudden surge of cases coinciding with the rural migration around Lunar New Year. A late-winter wave around the world follows months of rising tourism activity, sparking fresh concerns that several restrictions, including masks, if not outright lockdowns, may return. The possibility of existing and new variants disrupting economic activity remains intact.  35 2.75 19


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