Country Risk Management

Abstract

Too often companies get caught in an ‘investment trap’: they commit long-term resources to a country only to find that the bill of goods they were sold—or thought they understood—turned out to be something completely different. After the investment has been made, it is usually too late to withdraw without incurring large losses and experiencing reputational risk once the story hits the press. A risk manager may have the right information, but have based his decisions on a short-term assessment of the risks. The long-term view may be completely different, but in the absence of knowing what questions to ask and having clear lines of communication, the right information may not be taken into consideration. The simple way to limit the possibility that unforeseen events will occur is to establish clear reporting lines and really do your homework.