Country Risk for Business Leaders

Your organization has just officially started a new business operation in Country A. Being a high potential business leader, you have been identified by the management to head that international office as the first Country Head, the position perceived as equivalent to chief executive officer (CEO) at the headquarters. One of your main immediate concerns is how to deal effectively and manage the various risk potentials in a foreign country.

Country risk is the kind of risk originating as a result of doing business in a foreign land. For purpose of discussion, the country risk is categorized into six (6) groups –

A to F. As the Country Head, you need to identify; separate; and thus manage & mitigate the various risk events resulting or transpiring from each of the group.

Group A. Personal
Group B. Security
Group C. Natural disaster
Group D. Political
Group E. Operational
Group F. Health, safety and environment dried seahorse for sale

In this article, the writer tries to provide a practical approach or guide on how to go about managing the risk events and subsequently managing your business on a day-to-day basis.

Identification and separation of risk events: Probable risk events for each group include but are not limited to the following, taking note that one country is different from the other.

For purpose of demonstrating and easy understanding, each risk event is hypothetically classified into Low (L), Moderate (M), or High (H) rating.

Group A. Personal
A(i) residence (L)
A(ii) transportation (L)
A(iii) death threat (L)
A(iv) traffic accident (M)

Group B. Security
B(i) kidnapping for ransom/hostage (M)
B(ii) terrorist attack/sabotage/bomb threat (M)
B(iii) theft/burglary/crime (L)
B(iv) industrial espionage (M)
B(v) war (L)
B(vi) civil unrest/strife (M)
B(vii)sectarian violence (L)

Group C. Natural disaster
C(i) flood (L)
C(ii) major earthquake (H)
C(iii) sandstorm (L)

Group D. Political
D(i) change of power/political crisis (L)
D(ii) tension in neighbouring countries (H)
D(iii) sanction (L)
D(iv) nationalization (L)
D(v) deportation/capital punishment (L)

Group E. Operational
E (i) communication disruption (L)
E (ii) unavailability of essential services (L)
E (iii) information leakage (L)
E (iv) breakdown of office equipment/utilities (L)
E (v) fraud (L)
E (vi) forced closure of office (L)
E (vii) strike (L)
E (viii) sabotage (L)
E (ix) corruption (L)
E (x) currency restriction (L)
E (xi) legal compliance (L)

Group F. Health, Safety & Environment
F (i) fire (L)
F (ii) disease/epidemic outbreak (L)
F (iii)death of staff (L)

The total number of risk events in the above examples is 33; of which 25 is classified as Low (L); 6 as Moderate (M); and 2 as High (H).

Managing and mitigating the risk events: For practical purpose, we should be concentrating on managing the risk events that are rated as Moderate (M) and High (H) only – in this case, the total number is eight (8). We do not concentrate on those risk events that are rated as Low (L) because by normal standard, we can manage them. To avoid these potential risk events from turning into a crisis and thus affecting the business scenario of your organization, you as the Country Head needs to work out some forms of mitigation.

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