Cyber-attacks, the mass influx of immigrants and the worsening of climate changes, are the three most serious risks to the economy, as they were recorded in the survey of the Cyprus Economic and Competitiveness Council (CEC).
The results of the research were presented today at a SOAK press conference, by Council members Charalambos Papageorgiou and Evangelos Tryphonos as well as by Pulse Market Research Director Panagiotis Panagiotou.
This is the second consecutive year that SOAK is proceeding with the specific research to assess the potential risks and risks of the country's economy, which, as noted by Mr. Tryphonos, is a leading paper, i.e. a document that provides and guides for the sectors that should be given importance so that there are no serious consequences for the economy of Cyprus.
The survey includes a questionnaire with 18 possible risks in the economy, which was answered by 43 selected members of the private, public and semi-public sectors from various sectors of the economy, as well as the academic community.
As explained at the conference, the questionnaire evaluates financial risks based on the probability of their occurrence, the severity of their consequences if they occur and how soon they are expected to occur. The tool is adapted to the specificities of Cyprus and results in risk indicators and prices will be comparable on a continuous basis.
This year's recording was carried out during the period 18 September - 06 October 2023 and the 10 possible risks below are the tensions in the Eastern Mediterranean and the possibility of a heated episode with Turkey, the significant deterioration of Cyprus' position in the corruption indicators, the significant and prolonged increase in prices/inflation, the deterioration of public finances and a significant increase in public debt, the significant increase in corporate taxation, the sharp drop in Cypriot product exports, the prolonged drought resulting in water shortages, the worsening of climatic conditions, the terrorist attack on the territory of Cyprus and cyber-attacks with problems in the operation of vital infrastructures.
This is followed by the massive influx of immigrants, the continuation of the pandemic and/or new health crisis, the financial collapse of the general health system, the large drop in tourist arrivals, natural disasters, e.g. fires, floods, earthquakes, the failure to execute the digital transformation, the possible collapse of a systemic bank and the escalation of existing military conflicts outside Cyprus with economic implications for Cyprus.
According to the results of the research, as Mr. Papageorgiou mentioned at the conference, a higher risk index, i.e. the combined index of risk probability and severity of consequences, presents the risk of "cyber attacks with problems in the operation of vital infrastructures". The percentage of this indicator is 85%, as it was judged based on the answers of the experts as a risk with an 81% probability of occurrence and a severity of consequences that reaches 90%, and is placed in the immediate horizon, that is, until the next 2 years.
The second biggest risk is the "mass influx of immigrants" with a risk index of 82%. Specifically, as noted by Mr. Panagiotou, the probability of it happening is assessed at 77% with a severity of consequences of 88%, and is placed on the immediate horizon. As he noted, the concern about this issue is significantly increased compared to last year when it amounted to 75%.
At approximately the same level, with similar percentages and a high ranking in the risk assessment, this year the risk of "deterioration of climate conditions" is also assessed with a risk index of 82%. The probability of this occurring is 80% and the severity of the consequences of this risk is 84%. Nevertheless, this risk is not considered immediate in time but is placed in a more long-term horizon, i.e. in the next 5 to 10 years.
In the following positions of the table of risks of the economy, there follows a series of risks with a combined index of probability and severity of consequences at 80%: These concern the "deterioration of public finances and a significant increase in public debt" with a 69% probability of occurrence and a high severity of consequences with a grade of 92%, "natural disasters such as fires, floods and earthquakes" with a 77% probability of occurrence and severity of consequences with a grade of 83%, "failure to execute digital transformation", with a 74% probability of occurrence and severity of consequences with a grade 85%, the "significant and prolonged increase in prices/inflation" with a 70% probability of occurrence and an 89% degree of severity of consequences.
Also, as noted at the conference, there is great concern over the risk of a "deterioration of Cyprus' position in the corruption indicators" with the combined index rising from 69% to 77%. However, despite the large percentage increase in this risk, it still does not make the top eight risks.
The ten risks assessed with a higher than average risk index (76%) of the 18 risks examined are as follows:
Cyber-attacks with problems in the operation of vital infrastructure 85%, Mass influx of immigrants 82%, Deterioration of climatic conditions 82%, Deterioration of public finances and a significant increase in public debt 80%, Natural disasters, e.g. fires, floods, earthquakes 80%, Failure to execute digital transformation 80%, Significant and prolonged price/inflation increases 80%, Tensions in the Eastern Mediterranean and the possibility of a hot episode with Turkey 78%, Financial collapse of the general health system 78% and Significant deterioration of the position of Cyprus in the corruption indicators 77%.
As noted at the conference, in this year's survey there is generally an increase in the assessment of the risks that the economy may face. The overall combined index that captures the average of all risks rises from 72% to 76%.
In addition, concern about future risks has spread across a number of topics, with cyber-attacks, mass immigration and worsening climate conditions prominent. On the contrary, in 2022 the prevailing concern was a significant and prolonged increase in inflation, which this year appears to have abated significantly.
Source: KYPE