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COUNTRY RISK ANALYSIS

 

 

When a company becomes international, it has to face risks and uncertainties that are typical of a new environment. These difficulties are heterogeneous and range from risks of socio-political nature to macro and microeconomic deficiencies of the foreign country concerned.

The word “country risk” is intended as “the set of risks which are not encountered if transactions are done in the domestic market, but which can emerge when an investment in a foreign country is made. These risks are mainly ascribable to the political, economical, and social differences between the country of the investor and the country in which the investment is done.” (Duncan Meldrum – 2000)

From this point of view, our company provides internationally in-depth country risk analysis, which allows to structure a specific risk evaluation and take business decisions in absolute tranquility and in full knowledge of the possible risks that might be encountered.

PREVENTION IS BETTER THAN CURE

To turn into a profitable activity, the management of abroad business must consider the aspects emerging from the analysis of the country risk in the offer to customers.

In fact, knowing in advance the economic impact that risk management may entail for a specific business within a specific country, means make an investment that improve or protect the performance of the investment itself.

Often, company management and sales managers underestimate the issue, finding themselves facing unpredictable costs with negative impact on profit, such as non-compliance with deadlines, blocking of works, recovery or the need to re-motivate the staff, etc.

For that reason, into the estimates and economic offers it is necessary to take into account the costs of preventing country risk, which is only possible throught a precautionary analysis provided by a specialized companies, and contextualized at that specific time in the specific operating theater.

Risk management of personnel on mission abroad is not just an economic or financial fact, as it has an impact on the safety of human resources, on the reputation of the company and on legal affairs.

PEOPLE ARE THE COMPETITIVE ADVANTAGE

If we ask a CEO or an entrepreneur what the element is that determines success in a company, the answer is always the same: people .

That means that people are the fundamental component of competitive advantage. Although today there is a lot of unemployment and many people are looking for work, companies are not always able to intercept the right professionals to bring on board, make them grow, retain them and involve them. The loss of valid and experienced collaborators is a real financial damage for a company and if this is due to an underestimation of the risks to which personnel abroad can be subjected, it also negatively impacts its professional image.

Good people, talents, will never work for companies that do not guarantee the safety of their staff, because they will not be considered reliable and worthy of their trust. For this reason, reputation is an element that contributes to the success of a company.

REPUTATION CONTRIBUTES TO THE SUCCESS OF THE COMPANY

To work well, any economic activity must develop in a climate of trust; the trust of customers, suppliers and investors. Failure to prevent and manage the safety of business and personnel abroad has a negative impact on both the corporate reputation and the climate of trust, with all the consequences that naturally reverberate in the value chain.

IT IS IMPORTANT TO MINIMIZE THE LEGAL RISK

There is the legal aspect that often worries administrators and entrepreneurs more than anything else. No executive would ever make a decision that increases the legal risk of their business, especially in today’s particular situation, also due to the frightening repercussions that would impact on their career and personal legal position if something really goes wrong.

Until a decade ago, the possibility of being personally involved in an accident abroad was wrongly thought to be more remote. Today everyone knows that an operation abroad, especially in certain geographical areas, constitutes a risk. Only up to two years ago certain companies decided not to invest in prevention and security. It was thought to be a no-return investment: it was considered an avoidable expense.

Even today it is very difficult to explain and make managers and entrepreneurs understand the international situation, until it is the Public Prosecutor who does it in a courtroom.

Businesses and people face some very difficult situations when they do business abroad and the danger is never identifiable by western people. Terrorism, natural disasters, health emergencies, cultural differences… these risks are real. The way in which a company takes precautions, or does not do so, always has far-reaching consequences, unfortunately sometimes even dramatic ones.

THE BEST 6 POINTS STRATEGY

Organize

Organize

Involve the right people

Various people are involved in a risk prevention and management program, with different roles, both inside and outside the company. In particular, 4 internal subjects (Management, HR, Legal, Security) and 2 external subjects for Country Risk Analysis and Security abroad.
Collect

Collect

Get thre right and reliable data

International intelligence through a specialized company with guaranteed coverage and reliability of sources.
Analyze

Analyze

Define the real risk map

Analysis and interpretation of the data collected through a specialized company in Country Risk Analysis with staff in the destination country.

Plan

Plan

Mitigate the risks

Healthcare, Legal, Crisis and Emergency Response Support.
Communicate

Communicate

Educate the staff

Staff training on situations, traditions and habits in the destination, behaviors to be implemented and resources available in emergencies.
Evaluate

Evaluate

Keep the program active and relevant

Involvement, updating and continuous evaluation of the Team and country risk analysis.

ORGANIZE

The risk prevention and the protection of abroad interests impacts the business, personnel, reputation, legal affairs and legal risk of executives.

Various people are involved in a risk prevention and management program, with different roles, both inside and outside the company.

The first step in an effective strategy is to involve the right people and determine who is responsible for coordination: the Security Manager.

The lack of coordination between involved people represents the greatest risk of a Security program, both in planning and in managing any crises.

There are four internal subjects who must collaborate:

  • Top management
  • Human Resources Manager
  • Head of Legal Affairs
  • Security Manager

There are two subjects who must collaborate:

 

  • The company that deals with country risk analysis
  • The company that organizes travel safety

COLLECT

foloThe observation of situations in various contexts is a 24/7 job, which requires the utmost professionalism, even if selecting reliable information relating to each specific context.

‘Generic’ information services provide risk warnings relating to infectious diseases, fires, natural disasters and political upheavals, but they are always insufficient due to the lack of strategic information and short and medium term projections. In the event of a crisis, those elements are indispensable for the response units to act with the necessary promptness to generate correct reactions.

Useful information answers the following questions:

– what could arise current and future risks?

– how can the emergency unit respond to defuse that specific situation?

At the same time, some risks can take days, weeks or months to reveal themselves. And the solution may have to go on for long periods of time. That why it is necessary to know everything in advance.

The preventive collection of reliable information and correct projections is therefore essential to prevent and minimize the risks of missions abroad and cannot be done at home.

The collection of information is also a critical phase for commercial and technical logistics management, in order to prevent and avoid risk for contracts and profits during the implementation phase.

For those reasons, the information gathering phase through specialized companies must be considered an investments and not a cost.

The second step of an effective strategy is therefore to keep the Security Manager in close contact with the company responsible for collecting information, in order to have real time forecast in a specific countries and in the specific contexts where the staff is on mission.

The actions to be carried out in this phase are:

Keep the list of destinations up to date

where the contracts are in the quotation / offer phase and the missions in progress, also collecting the history of data and incidents during the previous missions.

Select and hire a company expert in Country Risk Analysis:

that is able to provide reliable information from reliable sources, through the presence of specialized analysts in the field. The choice of the consulting company is critical to obtain reliable, profitable and concrete preventive analyzes, capable of giving guaranteed results for long periods of time.

Manage data security and privacy:

the processing of personal data is connected to risk management, a branch that develops within the corporate risk management. When it comes to personal data, we need to think about methods of protection for the information itself and the methods used for its treatment.

ANALYZE

The collection of data and information is not enough without an analysis that correctly interprets its meaning.

If information is the starting point in the concept of Security, a consolidated method and a specific background of experience are then necessary for the implementation of a reliable information framework. By specific experience we mean a history of intelligence activities developed in the specific context.

Only in this way the information framework generated can be considered reliable.

Suddenly intervening to bring home personnel in a dangerous situation may be the consequence of the fact that the information framework from which the risk predictions were generated had not been developed by expert personnel, based on inaccurate and unverified information. That has thus suddenly led from a level of prevention to a level of risk containment, with an increase in both costs and stress of the personnel on mission, with the exponential aggravation of the probability of irreversible consequences.

‘The best analyzes are based on the active monitoring of different contextual aspects in the locations where the company operates, starting from the general aspects, up to touching specific scenarios concerning the activities carried out by the organization. Everything must be developed from a Security Policy perspective, designed to preventive protection from possible critical developments.

Those exams are very effective as a basis for assessments both towards the assumption of assignments in certain contexts and for the operating procedures to be adopted by the staff located on site.

In addition, it will provide data and parameters to maintain, where required, an immediate tactical response capacity, with appropriate men and means to the type of situation, eliminating reaction times that can often make the difference.

The Country Risk Analysis service is appropriate when it consists of a preliminary risk assessment, so-called six-monthly Vulnerability Report, a series of fortnightly updates and extemporaneous Alert Bulletins concerning high-risk critical issues.

Both Updates and Bulletins are needed to keep the various sections of the Vulnerability Report updated, which should consist of the various situations, as follows:

Overview of the country with general notes on social, health, tourism situation and all generic information that can make it possible to understand the situation at the time of the assignment and, conversely, with the context you will have to deal on locally.

analysis of current political situation and main possible criticalities. The functions of the government, the most important institutions, factions and movements. Notes of general value are included here such as areas to be avoided, authorities without value, international collaborations and the status of the local embassies. An unforeseen political change can also lead to sudden civil conflict, where investments such as plants and structures on site may not be defensible.

analysis of social structure to define the levels of coexistence, urban security, prevention of unfortunate phenomena often due to cultural misunderstandings, the behavioral to be adopted and avoided, as well as to better understand the local traditions. A social hardship could involve problems with the authorities or risks connected to even serious micro-crime phenomena, even to compromise the company image and relations.

detailed elaboration of ports and airports situation, communication routes, railways and river lines, travel and supply logistics, disadvantaged areas, news and traffic regulations, relevant construction sites, telephone and satellite coverage, driving permits and availability of private special and dedicated transport. An underestimation of the infrastructural apparatus can make a security plan useless, frustrate structural investments and isolate groups of professionals.

notes on military and police situation which are often in close contact with professional contexts. Any permits, limits and prohibitions, risk areas, hints of local legislation, specific assessments on the customer’s operational needs and on going aspects. This section is essential for the correct relationship with the institutions.

complete picture of meteorological and geological situation. For a correct planning of the Security model, also hurricanes, volcanoes and earthquakes are included in the surveillance model offered by our service. The critical events in specific area, the situation in recent times and the official sources responsible for monitoring are considered, preferring international military ones. Awareness of these potential factors allows adequate management of presences and investments, as well as planning of any evacuations in case of possible threats.

general assessment of foreign investments legislation, the protection of personnel, the presence of such factors on sovereign soil, the conditions of collateral security such as insurance, health care, adherence to international agreements and reciprocity. That topic, often considered outside a Safety framework, allows you to immediately have a perspective view of any obstacles in carrying out normal operating routines, thus preventing delays and hitches in the local area and avoiding risky situations for the staff, the means and structures.

complete picture of the situation in the destination countries which includes risk diseases, recommended and compulsory vaccinations, timing for obtaining the health certificates necessary to entry into the country, health insurance, local hospital situation, completion of bureaucratic obligations, first aid, etc.

cross analysis on particular needs of the designated subjects. This analysis may consider the limits of renewability of some visas, up to the procurement / import of particular life-saving drugs. From the possibility of local concessions with organizations and institutions, up to the possibility of taking advantage of particular tools or benefits such as armored cars, private air transport, priority access, etc.

PLAN

With a good understanding of your risk exposure, you can start detailed work on mitigating them.

At this point it is important to ask what to do to react in an emergency situation. Even minor problems can become more serious when mission personnel are unfamiliar with their surroundings.

It is essential to secure a health insurance plan for additional coverage of medical expenses. Make sure your health policy is comprehensive enough to mitigate all risks associated with mission personnel: vaccinations, medical treatment, hospitalization, medical evacuation, etc.

Other emergency resources to plan are legal support (as the laws of other countries are often very different from those of origin country) and aid during natural and political disasters. Even seemingly small problems, such as missing passport or luggage, can cause stress, inconvenience, and operational slowdowns in a foreign country.

Finally, there is the implementation of crisis response plans, for emergency situations that personnel on missions abroad may face. This plan is very critical, as a delay in responding or in communication often leads to missteps that can trigger dangerous spirals.

Crisis preparedness helps stakeholders to understand their roles and know how to react during emergency situations. It may be helpful, for example, to conduct critical condition response exercises with clients to develop and test the strength of customized operational protocols. That process allows them to understand and test operational procedures prior to events.

Creating a customized and comprehensive risk management plan allows you to solve problems much faster and manage situations more easily.

COMMUNICATE

When you have to manage risk missions, communication is crucial. Communications can make a difference in whether or not you are successful in protecting the safety of your personnel and therefore of the related business.

For proper staff training, we start from the initial risk assessment; in the planning phase of the crises, the potential dangers that can be prevented or reduced through training courses.

Based on this result, a proper communication is created to mitigate health and safety risks, to be shared through pre-mission orientation initiatives.

Communication must help staff in charge of abroad missions to understand the unknowns, to know the fundamental cultural elements of destination country and to create the awareness of having to take responsibility for acting according to the training and guidelines provided.

Finally, information should be made easily accessible on the company intranet, so the traveling staff knows where to acquire the information when they need it.

Communication is essential at every stage of the Security process: from sending alert notices to staff on mission, to training employees, passing through the disclosure of the newly implemented program.

In addition to specific information on destination country, all people on mission must be aware of the resources available in the event of an emergency. These indications must also be part of the orientation procedure for people traveling and living abroad.

All this is often a significant commitment, for this reason many companies choose to collaborate with specialized companies that can manage communication for them: a comprehensive training can take the form of destination guides, classroom preparation, webinars, monthly local awareness-raising newsletters and more.

EVALUATE

All business risk management programs lose their momentum once set-up is complete.

As the risks change constantly and sometimes even rapidly, it is important that the Security Manager keeps the country risk analysis process alive through specialized companies, the relative updating of the risk management planning and the communication to personnel.

The actions to be carried out regularly are:

Continuous updating of the Country Risk Analysis:

useful to the commercial management for new businesses, to general affairs for legal protection, to the personnel involved for proactive prevention.

Keep the Security team alive:

Regularly meet with internal people (security, legal affairs, risk managers, HR) and those outside the company (country risk analysis and travel security companies) to discuss the program and any improvements.

Plan in advance:

Periodically meet with managers to find out about the new destinations or the most frequented ones to which the business leads, to update the risk map.

Contact us

+39.02.8252342

MIlano

Centro Direzionale Milanofiori
Strada 4, Palazzo A5
20057 ASSAGO (MI)

Roma

P.le Roberto Ardigò, 30/a
00142 Roma
Tel. +39 06 45442737

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