Magazines Archives - 2009 August

Asian countries rank among the riskiest for business ...
Story 8 - News Feature

... But risk management and responsible business practices will ensure profitable investments.

SOME Asian environments have been ranked by UK-based risk-consultancy firm Maplecroft as being the most hazardous in the world for business. The company’s recently-released Global Risk Index categorises India, Indonesia and the Philippines as high risk, alongside Pakistan, Nepal, Bangladesh, Sri Lanka, Cambodia and North Korea.

However, high risk is still a notch better than the extremely risky category, which includes Myanmar and African states. Laos, Thailand, Mongolia, Vietnam and China are considered medium risk in the index, while Malaysia, South Korea, Singapore and Japan are low risk.

Designed for multinational organisations, the Global Risks Index provides comparable risk intelligence for 163 countries. Criteria for the study are: Energy security; corporate governance and corruption; emerging powers; terrorism and conflict; macroeconomics; government risk and geopolitics; climate change and environment; health, safety and pandemics; natural hazards; and societal and human-rights risks.

The study singles out India as the most vulnerable among the BRIC economies (Brazil, Russia, India and China) “because of its huge role in global supply chains”. “High population density, security risks posed by Maoist and Islamist violence, resource security — relating to energy, water and food — and human rights violations, all contribute to its poor ranking,” it explains.

The index also identifies Indonesia’s rising debts, fiscal risk concerns over terrorism and conflict among factors that put the economy in the high-risk group. In addition, decreasing energy, food and water security, along with a growing HIV/ AIDS threat work against the country’s favour.

Meanwhile, the Philippines is saddled with growing debt and concerns over political violence. Its water and energy resources are also becoming less secure, the index noted. Maplecroft also finds China lacking in resource security, in addition to being plagued with environment issues. “Competition for land and water are further compounded by increasing urbanisation. However, China is making significant strategic investments in access to land and resources overseas to mitigate some of these effects,” the company reveals.

Stressing the importance of monitoring key global risks to ensure profitable investments, Maplecroft’s chief executive, Alyson Warhurst, says: “Global risk management proficiency that is both informed and proactive, combined with responsible business practice, can lead to an improvement in the performance in countries of high and extreme risk. This can contribute to business opportunities and reputational leadership on the part of the business as well as ensure a long-term social licence to operate,” he adds.

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