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Yesterday, the risk management consultants at Aon published their 18th annual Political Risk Map, an interactive guide to the world's hotspots for turmoil and violence—a handbook, if you will, of where not to do business in 2011. As dictated by a series of economic, political and social variables, 211 countries have earned designations across a six-point scale, from "Low" to "Very high" risk. Overall, the firm says, political risk has increased in the past year amidst economic uncertainty and the discontent it has caused among populations.
Let's have a look at the results.
Low risk: Bring your A-game
At the foot of the scale are the "low risk" countries, of which the United States is unsurprisingly a designee. Throw Western Europe, Japan and Australia in there and you're basically looking at the top tier of global diplomacy—America and her powerful allies, if you will. Most "low risk" nations face the possibility of "strike, riot, civil commotion, and terrorism" as the sole threat to business prospects, considered mere child's play when compared to the the likelihood of "civil war" or "sabotage" elsewhere. These governments support healthy, liberal economies, retain unquestioned political sovereignty, and do not engage in warfare on home soil, the Aon contingent asserts. Or, in other words, these are the rich folks. A good place to plant your business indeed!
Medium-low risk: Bring security
The next level of risk is "medium-low", which includes some inexplicable designees. Some of the big names with developing economies are mentioned here: India, Brazil, South Korea, South Africa, and much of Eastern Europe take their rightful place on the low end of the scale here. However, in a matter of extraordinarily poor timing, Tunisia also assumes the "medium-low" designation; unfortunately for Aon consultants, the Tunisian government they deemed stable and business-friendly has suddenly and completely collapsed, amidst pressure from the "strikes, riots, and civil commotion" they have recently faced. (They should've added "no jobs" or "people lighting themselves on fire" to the list of potential threats to business operations.) Also making an unreasonable appearance here is Mexico, where drug-trafficking gangs hold more sway over the economic agenda than does the crippled federal government.
Medium risk: Bring bribe $$$
The rest of the world's major economic players sport "medium risk" designations, most of which make sense. China, Russia, and Turkey are the big names here. Russian and Chinese businesses are subject to "political interference", tough "legal and regulatory" climates, and "supply chain disruption", as well as the same old riot/terrorism threat that plagues the whole map. In short, if you bring your business to a place like Russia, there is a 50 percent chance that Vlad Putin will crush you and assume all of your assets. Unless there's something in it for him. Fair enough.
Medium-high to high risk: Hire a local militia
Now we're getting to the good stuff—the bad boys of the world stage. "Medium-high" is populated by a lot of 'stans—Kazakhstan, Uzbekistan, you get the picture—as well as about half of the African continent. "High risk" countries include Pakistan, Bolivia, Cuba and Nigeria, places where political interference is the norm and "sovereign non-payment" comes into play. Here we also witness the rise of "war/civil war" designations—everyone knows that civil war is a major drag on sales—and the prospect of worthless currencies.
Very high risk: GET THE %@$# OUT OF THERE!
Last but certainly not least, the good people at Aon warn businesses against operating in 11 countries where political risks are "very high". If the low risk-ers are America and her allies, the very high risk-ers are the Axis of Evil and the rest of her Galactic Empire. That's right! Iran, Iraq, and North Korea head the list of no-go's. Also making appearances under this unwanted designation are countries where anarchy, not established government, rules the day: Somalia, Sudan, the Congo, Yemen, Afghanistan and Haiti all fit that bill to a large extent. The remaining pair, Venezuela and Zimbabwe, saw their ratings suffer from perceived despotism and, of course, every other problem in the book.
Life lessons, Aon style
1)Don't do business amidst civil wars and rioting
2)Don't do business with tyrannical despots
3)Don't earn worthless currency
To see Aon's 2011 Political Risk Map, click here.
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