A Short Guide to Political Risk by McKellar Robert

Author:McKellar, Robert
Language: eng
Format: epub
Publisher: Ashgate Publishing Ltd
Published: 2012-04-07T04:00:00+00:00

Figure 4.4 Stakeholder assessment model

At this point, stakeholders can be mapped according to the assessment, as illustrated below in Figure 4.5 (this is somewhat simplified – in practice there would likely be more stakeholders).

Figure 4.5 Stakeholder map

We now have our priority stakeholders, and we have an indication of how they could react to us (that is, specific types of influence driven by attitude). The potential negative reactions become risk factors. In addition, we have another piece of intelligence stored away for risk management planning: potentially supportive stakeholders.

Political Terrain Analysis To reiterate, we not only need to understand our potential effect on political interests and how that generates risks, but we need to know what is happening in our operating environment irrespective of our presence. Imagine flying over a country and parachuting out. Even before you hit the ground, there will be a lot going on, and the people and companies already there will be experiencing the effects of a unique set of political trends and conditions. Once you land, you might have an impact on the situation, but you will also be subjected to the same risks as anyone else. We need to understand these exogenous risks.

A natural starting point is a scan of relevant trends within each of the principal sources, or drivers, of risk: instability; weak governance; and conflict (as defined in the last chapter). We know from the previous two chapters what kinds of risk are associated with a heightening of each source of risk. If we understand the pace and direction of the evolution of each source, then we can develop hypotheses about relevant risk factors at the appropriate level of analysis, global or operational.

There are differences between the corporate and operational levels in this exercise, not in the type of trends under the microscope, but in the level of abstraction. At the corporate level we are seeking an understanding of risk factors relevant to our operations in emerging markets generally, and especially in regions where we have considerable interests. At this level, what we are really doing is aggregating what happens across a range of countries, to try to get an overview of global and regional issues. At the operational level, we are dealing with a single country or sub-part thereof, and therefore we can reasonably hope to obtain a much more nuanced and detailed level of understanding. That being said, the types of trends are the same. The corporate level simply aggregates country-specific information at a higher level of abstraction.

Chapters 2 and 3 have already highlighted some relevant trends and risks that derive from them, but we can suggest a few observable trend indicators here which are commonly applied in analyses of the exogenous political terrain, as follows.

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