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Risks Group, the international business risk consultancy, has published
RiskMap 2005, its annual study and forecast of political and security
risks across the globe. Although the headlines in 2005 will continue
to be dominated by the ongoing ‘war on terror’, the
report argues that this may only serve to distract business from
the more direct and critical challenges they will face around the
world. While acknowledging the global security consequences of events
in the Middle East, RiskMap 2005 contends that the greatest threat
to corporate success in key investment destinations such as Russia,
Nigeria, Venezuela and Indonesia will be longstanding and local
risks.
Risks to business in key countries as identified in RiskMap 2005
are detailed below.
MIDDLE EAST
Iraq:
* Insecurity in Iraq reached unprecedented levels towards the end
of 2004 and looks set to continue.
* The US and Iraqi governments remain determined to hold elections
in January 2005, regardless of the security situation.
* The severe restrictions on the abilities of companies to carry
out reconstruction work in 2004 will continue throughout 2005.
Iran:
* Iran’s nuclear programme will continue to dominate its international
relations in 2005.
* Effective UN sanctions remain unlikely, which may force the US
or Israel to take decisive action, possibly involving air strikes
against nuclear sites in Iran.
* However, full-scale military action against the regime is not
in prospect.
Saudi Arabia:
* After more than a year of fierce battles against Islamic militants,
the government appears to be gaining the upper hand, but further
large-scale terrorist attacks remain possible and small-scale targeted
killings of Westerners are probable.
* The wave of terrorist attacks has brought a broad consensus on
the need for far-reaching changes and Saudi Arabia’s rulers
have a rare chance to define a positive agenda for the country’s
future.
* Political and economic reform could limit the recruitment of extremists
among the burgeoning population of under-employed young men.
AFRICA
Nigeria:
* Crime and corruption will continue to pose the main risks to companies
operating in the country.
* President Olusegun Obasanjo will continue to face challenges,
but opposition groups will not be able to threaten his position.
* Militant groups and community demands will continue to affect
business in the oil-rich Niger delta.
AMERICAS
Brazil:
* Investors will remain watchful for any sign that President
Luiz Inácio da Silva is moving away from business-friendly
policies towards more leftist, labour-orientated policies.
* Violent crime will remain the key security concern for business
personnel, especially in urban areas.
* Any Colombian guerrilla activity will remain restricted to border
areas in Amazonas state.
Venezuela:
* President Hugo Chávez, emboldened by his 2004
referendum victory, is likely to adopt a more confrontational approach,
bringing greater state intervention in the economy.
* Any fall in the oil prices would cause serious problems for the
government.
* The main security concerns are the risk of renewed political violence
and rising crime.
ASIA & PACIFIC
China:
* The government’s main priority is to avoid an economic hard
landing following several years of over-investment.
* The operating environment will continue to improve, with new measures
to deregulate the labour market and roll out legal system improvements.
* Foreign investors’ enthusiasm for China will be boosted
by the build-up to the 2008 Beijing Olympics and related infrastructure
projects.
India:
* Key crisis points will include three state elections
– in Bihar, Jharkhand and Haryana – and the 2005-06
budget, all due in February 2005.
* Economic policy will be broadly reformist, offering attractive
opportunities to foreign investors in many sectors.
* Growth in the business process outsourcing (BPO) sector will slow
in a tightening labour market.
Indonesia:
* New President Susilo Bambang Yudhoyono will attempt far-reaching
policy reform, but will face difficulties in parliament.
* The convoluted regulatory system and corrupt judiciary will continue
to act as strong deterrents to investment.
* Following a number of counter-terrorism successes, the Islamic
extremist Jemaah Islamiyah (JI) could seek to adopt cruder tactics,
such as individual assassinations.
EUROPE & FORMER SOVIET UNION
Russia:
* President Vladimir Putin will continue to strengthen his rule
and his advisers will begin to prepare public opinion for the possibility
of a constitutional amendment to allow him to remain in power beyond
2008.
* The government will play an increasingly active role in the oil
and gas industries, and deals reached without consulting the authorities
will be subject to political risk.
RiskMap is available to purchase at a price of £150.00.
www.crg.com
•Date:
23rd Nov 2004 • Region:N.America/World •Type:
Article •Topic: Operational
risk
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