Security and risk consultants Control Risks Group (CRG) has launched its 10th Annual Risk Survey RiskMap.
Control Risks Group (CRG), the international business risk consultancy, has launched its 10th Annual Risk Survey RiskMap 2002, setting and assessing the risks agenda that business leaders will face in 2002. The RiskMap report picks out six critical issues facing the business community in the coming year. Firstly, corruption has become the preferred weapon for organised crime. This, and the blurring of the once clear distinction between terrorism and organised crime, demands that companies must commit resources to combating corruption. In a world of uncertainty, loyalty is no longer deemed a priority by employers, or as necessary by the employee. Such changes in the ‘worker/company’ relationship lead to serious risks of malicious damage and fraud to business. Understanding and managing ‘social capital’ (employees)
will be more important than ever. A natural response to September 11 has been for global companies to retrench, or to focus on defensive moves such as blanket bans on international staff travel or the wholesale repatriation of overseas employees. It is the view of Control Risks, and a conclusion of RiskMap, that all-encompassing, knee-jerk reactions, whilst understandable, are inappropriate and that corporates must act to minimise risk rather than retrench altogether. For global businesses with overseas employees, the economic slowdown and fluctuating world situation emphasise the need for corporates to adopt new expatriate policies. These include balancing cost and security against the need for business control at a local level and the requirement for local skills, while at the same time maintaining overall quality and safety. The international war on terrorism is likely to provide a boost authoritarian regimes that may adopt ‘anti-market’ and ‘non-transparent’ measures to bolster their own positions. RiskMap highlights the need for companies to ensure that this scenario is factored into their entry strategies or continued investment plans in any particular territory. The events of September 11 have demonstrated that the ‘global elite’, particularly the United States, is physically as well as economically vulnerable to distant conflicts. RiskMap finds that corporates must hold firm, mitigate any risks and continue with business as usual. Eight key risks are also identified in the 2002 edition of the RiskMap Survey, together with predictions about each. The response of individual
companies to these risks (detailed below) will determine who succeeds or fails, CRG argues. The eight key risks identified in the RiskMap 2002 Survey are:
Further terrorist attacks in developed countries likely. Use of alternate weapons of terror, including bio-terrorism. An increase in globalised crime, in drugs, arms, money laundering and immigrant smuggling, as a result of an economic slowdown. Increased criminal activity fuelled by higher unemployment. More white-collar crime. Unforeseen disruption to business travel arrangements. A greater reluctance among struggling economies to implement overdue economic reform programmes. Attacks against foreign economic interests in high-risk countries. Additionally, the 2002 RiskMap survey has increased the number of countries rated at (or with areas rated at) HIGH or EXTREME security risk by 30 per cent to 60 countries (RiskMap 2001: 46 countries). Interestingly, the ratings accorded by RiskMap to the United States and the United Kingdom have remained unchanged at LOW despite recent events. Control Risks’ analysts conclude that the overall likelihood of crime and terrorism in the US and the UK remains low, though there is a credible risk of more one-off attacks. Even prior to September 11, the economic decline and growing tensions involved in running global businesses were leading senior managers to take a less confident approach to international investment. The RiskMap Report argues that despite global uncertainty – economic and military – corporates should not suddenly stop doing business in countries that perhaps now seem risky. Instead, RiskMap concludes that companies must adjust their risk management procedures to enable them to continue business as normal. Ceasing to do business overseas is simply not an
option for most global businesses. Richard Fenning, Chief Operating Officer of Control Risks says: ‘Now is not a time to retreat or to stop doing business internationally, but to manage risks rather than be managed by risk.’ RiskMap is available to purchase at a price of £150. For details ring Emma Hall on 020 7970 2166 or e-mail: [email protected]. Control Risks is an international business risk consultancy. Since its foundation in 1975, Control Risks has worked in more than 130 countries for more than 5,300 clients – including 86 of the US Fortune Top100 companies. Countries at or with areas at EXTREME security risk are (in alphabetical order) Afghanistan, Burundi, Central African Republic, Chad, Liberia, Pakistan, Russia, Somalia, Sri Lanka, Sudan, Tajikistan. (CRG defines extreme as: the severity of security risks to assets or personnel is likely to make business operations untenable. There is no law and order; conditions may verge on war or civil war. Companies must strongly consider withdrawal.)
