The Transformation Risk
WARNING

9th January 2018

By Ingo Plöger, President, Strategic Council, CEAL
Which is the biggest risk: transforming or not transforming?
The answer seems obvious, but ambiguity is precisely in the process of change. Transformation generates new and unpredictable changes that, for the evaluation of risk, it is considered an insecurity. On the other hand, immobility is considered a risk in the face of changes in the uncertain and disruptive environment.
Latin America is going through moments of strong political, structural, economic and social transformations. Risk assessment seems to give quite an unfavorable grade in these transformations, but it’s important to evaluate them from several angles.
Strong transformations in democracies are informed in real time by instantaneously showing political changes in countries, and rulers are always “running after the news” reacting rather than acting. The risks of change, especially when they affect segments of the population, such as the elderly, when it comes to retirement, or salaries when talking about public servants, or women when it comes to equality, among many others, generate immediate reactions by those negatively affected. Thus, the risk becomes evident and the perception of its degree of impact cannot always be assessed objectively.
Markets react, pricing the risk. In autocratic governments, risks are not revealed in a transparent way and the side effects are unseen, and the market often does not objectively quantify the …

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