Export Risk Monitor 2018: Positive mood despite continuing risks

No all-clear: currency risk still feared
According to the survey, an exceptionally high 90% of all companies surveyed suffer from currency risk, one third of them severely. "The strong franc is weighing on internationally active companies in two ways. First, some companies are unable to generate sustainable margins against the euro. For some relief, the euro would have to gain another 10% against the Swiss franc. Secondly, companies are still very much aware of the consequences of the rapid appreciation of the Swiss franc following the lifting of the minimum exchange rate by the Swiss National Bank in 2015," explains Stefan Ruf, CEO Euler Hermes Switzerland.

The spectre of protectionism
Export-oriented companies expect an increase in political risks in 2018. At 58%, almost two-thirds state that they fear an increase in the risks to their export business due to growing protectionism. In particular, possible measures by the USA - one of Switzerland's top exporting countries - contribute to this assessment. The hope remains that the Swiss export industry, which tends to specialize in narrow niches, will be less affected by the excesses than countries with strengths in mass markets such as steel production. "We are a niche supplier, accordingly we can mostly operate under the radar. Protectionism often only affects large industrial sectors such as the solar, automotive or household appliance industries," said one company interviewed.

Need to catch up in risk management
Although the importance of compliance issues has risen sharply internationally, 29% of Swiss companies state that they comply with the laws on corruption in export countries. The introduction of compliance regulations is also only cited by just under a third of the survey participants as a measure against the risks of a lack of legal certainty.
In the area of payment defaults by foreign customers, many companies lull themselves into a possibly false sense of security. 88% of the companies without credit insurance state that they can do without it because international payment defaults have been rare in the past.

Insufficient measures against cyber risks
For the first time, the 2018 survey includes the dangers posed by cyber risks. Cyber risks are of great importance in important markets for Swiss exporters, such as Russia, China and India. Although the companies have recognised the danger, they are still insufficiently protecting themselves. Only 22% have a documented incident and crisis management process, and only 23% conduct independent audits of data protection and data security. This raises doubts as to whether cyber risks play a sufficient role in the companies' risk management process.

Sentiment and exports still on the upswing
"After another good export year in 2017 with 4.7% export growth, companies expect a further increase in exports in numerous countries. The development of Switzerland's three top export markets, China/Hong Kong (8% export share), the USA (15%) and Germany (19%), is assessed as particularly positive. Even for the UK, a positive export development is expected - despite the ongoing BREXIT process. The volume of exports to Turkey and Brazil is expected to remain at least the same, or at best increase slightly," explains Paul Ammann, Head of Executive MBA, Bern University of Applied Sciences.

Swiss economy records solid growth
"We expect the dynamic economic development in Switzerland to continue in 2018," says Gregor Eder, Senior Economist at Euler Hermes and the Allianz Group. "According to our estimates, real gross domestic product will increase by 2% in the current year. We expect domestic demand to remain buoyant, with investment activity in particular likely to continue to increase noticeably. Strong growth impulses should also come from export demand in 2018. The most important consumer countries for Swiss goods exports are still experiencing quite dynamic economic development. As we do not expect a noticeable expansion of protectionist measures at the global level, the negative effects for the Swiss export industry in particular should also remain rather limited."

• Complete study (please click on the left)  eulerhermes.ch/export-risk-monitor and www.ti.bfh.ch/exportrisiko_monitor