New dimensions of risk

As the corporate investment universe has expanded over the last decade to include less stable emerging markets, the threats have become more dynamic and the time to react has been compressed.

Not too long ago, assessing country risk as part of an investment decision was considered an afterthought. The long period of economic expansion and relative geopolitical stability following the fall of the Berlin Wall and the end of the Cold War ushered in an era when many global companies and financial institutions considered their country risk teams obsolete. As they developed market entry and expansion strategies, business executives focused mostly on market sizing, demand forecasting, and understanding basic regulatory dynamics. Economic, political, and security risks were taken into account only if they were severe enough to derail the entire investment or result in massive losses.

How times change. As the corporate investment universe has expanded over the last decade to include less stable emerging markets, the threats have become more dynamic and the time to react has been compressed. The aftermath of the Arab Spring, instability in Venezuela and Thailand, and the recent crisis in Ukraine are emblematic of a new class of unanticipated shocks that global corporations face. Simply designing mitigation strategies is no longer an option. Business leaders need sophisticated analytics and expert insight to accurately gauge-and pre-empt-the diversity of risks they face today. They need a holistic corporate risk management system that covers all the bases: from assessing investment risks during feasibility analysis to monitoring risks during implementation and operation.

IHS knows risk. We have been on the forefront of country risk assessment and analytics for over a decade. With the 2012 acquisition of Exclusive Analysis, IHS has significantly expanded its capabilities to monitor, analyze and forecast political violence and security risk at a very granular level. Using highly integrated, data-driven tools we can anticipate negative impacts on operations within an area of 500 square meters. Our 50 analysts based in the UK, US, and Singapore monitor both short- and long-term trends and design risk strategies with the mission of protecting assets, operations and personnel.

IHS is taking the lead in utilizing cutting-edge visualization and mapping tools to allow for quick decision making in times of crisis. Going forward, assessments of risk will become even more dynamic. We are developing tools to analyze real-time social media data to predict when and where an event might occur. And we are relying even more than before on gathering intelligence from sources on the ground. All with the objective of minimizing your business risk.

Zbyszko Tabernacki Vice President, IHS Economics and Country Risk.
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