Political Risk Checklist
How can companies plan to respond to largescale political risk?
Published on: Mar 4, 2016
Transcripts - Political Risk Checklist
Political Risk ChecklistPolitical risk isn’t an abstraction: it is a concrete threat to life, assets, business relationships, profit and reputation.Yet few companies prepare adequately. Twelve things to think about after Egypt, Bahrain, Libya and Tunisia: 1. Exposure: How exposed to political change is your business? Have you had it assessed, and looked at all of the different areas – sales, marketing, production, ownership? Who is responsible for it in your business – security? Legal? Risk management? If a problem isn’t owned and isn’t measured it won’t get better. 2. Planning: Do you have crisis management plans for political unrest? Are they real plans, or just documents that sit on shelves? Do you carry out exercises, or do you simply assume all will be well? Is this left to security or does management take a stake? Is this area adequately funded? 3. Assets: What assets do you have abroad – physical, financial, reputational? How do you value them? What happens if you can’t get access to them for some reason? Where are they and what (or wh o) would replace them if you had a problem? 4. Advance warning: Would you have known what happened in Egypt or Libya as fast as you needed to manage the problem? How much notice of trouble do you need – a day? A week? A month? Whose job is it to keep an eye out for trouble? How do they do it – watch the TV? Listen to the radio? 5. Security: Could you protect expatriate staff in remote sites if things get difficult? How – by physical barriers? Armed protection? Are they in compounds in isolated areas or in cities that might face urban unrest? Do you have local staff that might face issues just as bad? 6. Evacuation: It is easy to complain about the difficulties faced by expatriate workers in getting out of Libya. But do you rely on government, or seek your own solutions? Could you get staff out in time – or after a problem? How? If the problem was really bad (civil war, for example) how would you get to them, or get them to a safe airport, seaport or road? What about local staff – would they fend for themselves? 7. Communications: Could you speak to staff if the internet were cut off – and cellphones weren’t reliable? Do you have satphones? Two-way radios? Are you dependent on local carriers, or electricity? What could you tell people calling your office about staff or customers? What would you say to the media? 8. Customers: Are important customers dependent on politically risky markets? Are your clients likely to suffer if a country is volatile, or a government changes? Are you (without your knowledge) dependent on agents or companies that have political affiliations? If a government goes, will your business go with it? 9. Supply chain: If a country, region or city suffers from turmoil, will you lose access to vital supplies or suppliers? What is your equivalent of the Suez Canal – an airport? Road? Where are your suppliers – can you locate them on a map? And how do they ship to you, or communicate? Who owns them? 10. Investment: Where does the capital for your company come from? Are investors overseas always what they seem to be? And where have you invested? Do you know the backgrounds of your investment partners and their affiliations? Are the linkages that seemed so positive last year now actually liabilities? 11. Insurance: If things go wrong, are you insured? Are assets, trade deals, people insured against problems like confiscation or war? Did you know you can get insurance in case you don’t have access to your assets or investments? If you have to pay up for evacuations and security, who foots the bill? 12. Political relationships: Does your business rely on political relationships for trade, investment, access to clients, regulatory approval? Are those relationships assets or liabilities in the wake of change? Who vets them? Who knows about them? Are they all conducted on a sound basis? Andrew Marshall is a consultant with Consultifi. He works on business risk and strategy. Andrew@consultifi.com