BUSINESS owners are in the business of taking risks: No pain, no gain. Successful business owners are the ones who know how to manage and profit from the inherent hazards found in every business venture.
The key to handling all kinds of danger is information. You do not drive down the road without a rear-view mirror any more than you would with your eyes closed. If you do not know what is going on around you, you cannot plan a defense strategy. This is called “situational awareness”, which then creates “situational preparedness”.
Control Risks Inc. is an independent, global-risk consultancy specializing in political, integrity and security risks that has offices and analysts all over the world. The company is paid to assess and constantly update the situation in any given country according to three kinds of risk: integrity risks, political risks and security risks.
Integrity risks deal with three factors: Corrupt practices imposed by public officials with whom a company is obliged to deal; corporate malfeasance on the part of commercial partners and competitors; and theft, dishonesty or fraud perpetrated by employees.
Political risks basically deal with political instability and, for lack of a better term, the political personality of the current leadership. One commentator describes them this way: “How comfortable does Mr. President or Madame Prime Minister look in the role? Too comfortable, and you may be tangling with a despot before you know it; too nervous, and [he or she] may not be around for long.”
Security risks deal with protecting hard assets and the person from harm. But it goes beyond the security of intellectual property and reputation.
The Philippines is barely on the radar screen for these risks, since it is rated “medium” in all categories, except for security in the Zamboanga area. Developed countries are all rated “low”, while high-risk nations are the ones in the newspapers almost every day.
However, the takeaway from reading the reports is that it does not take much to go from being a relatively lower-risk nation to a higher-risk one. A constitutional crisis can occur and, suddenly, the military is in charge.
The perception of having a reasonable and acceptable security condition can change overnight if something happens and is handled badly by the government. Think of the hostage-taking crisis at the Quirino Grandstand in August 2010.
Like with our own personal and family risks, businesses must be on constant guard. The government must be ready to respond properly and effectively to seemingly minor incidents, rather than wait for something major to happen.
We are “risk-controlled” for now, and we cannot afford to let that status change for the worse.
Image credits: Jimbo Albano