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Is this world really a riskier place?

Is this world really a riskier place?

Q. What are the real hot spots that European and international companies should be wary of?

A. In our recent 'Risk Map 2007' report we highlighted countries such as Afghanistan and Iraq as extreme risk, but in the grand scheme of things it is not probable that companies are flooding into these areas to do business. However, Nigeria, Angola, Colombia, the borders of Venezuela, Algeria and parts of the Middle East such as Saudi Arabia are all considered high risk and there is a lot of business going on in these regions. It is probable that companies will face security issues operating in these areas and should take measures.

Q. Is terrorism really a threat that European businesses can plan for and manage or should they concentrate on more immediate risks?

A. There are some countries where terrorism is a significant risk. But because it grabs the headlines, it is our firm view that it is over-egged as a risk and people can spend a disproportionate amount of time and money managing it down.

Our general view of terrorism is just like any other risk--it needs a contingency plan and in countries where there is an elevated risk there will need to be prevention measures.

Our view of world terrorism and security risk is that it is a concern but it is a manageable risk, while reputational risk, for example, is more of a nuisance and more difficult to deal with.

Q. Similarly pandemics, energy and hurricanes were all in the news 2005/06 but are these really risks for business to focus on, given limited resources?

A. Natural catastrophes are a big risk and quite difficult to deal with. Pandemics are interesting, and we feel companies are not doing enough since it has fallen out of the headlines. The risk is still there and if it does happen the affect on business could be catastrophic. The chances of it happening are small but if it were to happen it would have a bigger impact than say terrorism.

Q. Russia has also been in the news of late. Is this still a country where European companies can do business?

A. There is increasing concern about what Putin's government is up to and we highlight Russia as a country to watch. In the high risk areas, such as natural resources, companies need to be aware of what is going on.

But is Russia still a place to do business? Absolutely, Russia does not pose a high security risk. For the average business there is very little security risk and not a great deal of political risk.

If anything Russia is a much better place to do business now than 10 years ago. There is white collar crime, corruption and a lack of transparency in the business environment but these risks are all manageable. We recommend that preparedness and going into the Russian market with eyes open are key.

Q. In general what political, social and economic trends should companies consider in their risk management strategies?

A. At face value you may think that the world is a more dangerous place than it ever was.

But in reality there is unparalleled stability and harmony. At the same time the global economy means that companies are being driven into high risk countries. In risk management terms there are commercial opportunities to go into places to gain an advantage, if you put the right risk management in place.

But there is real pressure on boards to make sure that proper mitigation measures and in place. The burden of risk management is increasing.