Why should companies look at political risks in new markets?
26 Sep 2019 | Strategy & Risk
“When we think about political risks, one of the misperceptions is that political risks only exist in countries that have an unstable political structure. That’s not the case. And in fact we are learning right now, with the situation in the US and also with the Brexit question, that political risk can actually happen in any market.
And it’s important that we understand that it’s not just about political issues, it’s about regulatory issues, it’s about legal shifts that may happen in a country. And that’s why when any company wants to enter a new market, it’s very important that we look at the implications of political events, such as elections, such as upheavals, and legal shifts.
There are obviously many ways to address such risks and mitigate such risks. Our experience, which is mainly in Eurasia, has been that a stakeholder mapping and a stakeholder strategy is one of the best approaches.
So what happens in a stakeholder strategy is that we actually identify the key stakeholders that can influence a project or a decision, a project award for example. We interact with them. Through the interaction, we identify the political risks that could emerge and we also identify risk mitigation strategies.
What usually happens is that some stakeholders may be in favor of a new project or a presence of a foreign company in the market. Other stakeholders may be neutral. And a third group of stakeholders may actually oppose the proposed idea or project. And that’s why it’s important to know who the stakeholders are, what their perception and what their views are, and how the company can engage them and can communicate with them. And this is where we come in as consultants and help the company understand the nature of the political risk, identify stakeholders, and develop a stakeholder strategy.”
Strategy & Risk
To capitalize on new opportunities, a strong strategy needs to keep pace with rapid change while navigating risk with foresight and confidence.
Dr. Bijan Khajehpour | Managing Partner
Bijan is a veteran strategy advisor for the West Asian markets and has over 25 years of strategic consulting experience with global companies. Read more
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