EIU ranks Ghana among African nations with worsened operational risk

Operational risk is termed as the risk of losses caused by flawed processes, policies, systems or events that disrupt business operations.

The UK-based firm in its recent Operational Risk Outlook attributed Ghana’s worsening score to the deterioration in the macroeconomic risk sub-category.

“The operational risk scores for 16 of the 51 African countries in EIU’s Operational Risk Service worsened between end-2022 and mid-2023, including those for Ghana, Egypt and Sudan”.

“This reflects the negative impact of rising domestic consumer prices on businesses’ profit margins and the wider implications for exchange-rate and monetary policy,” the EIU said.

The firm, however, noted that despite the ongoing shocks in the global economy, macroeconomic risk had retained its position as the best-rated subcategory across the region with an average score of 43, equivalent to a C rating.

It clarified that this mainly reflects the relatively rapid economic growth associated with expanding populations.

In addition to the rankings, some 11 out of 51 African countries, including Tanzania, the Central African Republic, and Ethiopia recorded an improving Operational Risk Outlook.

Despite this, the EIU cautioned that “We also believe that there is a high risk of financial sector distress, given high and rising public debt levels and comparatively low levels of banking supervision and autonomy in the region.”