@Risk

Mounting tensions with Iran have many keeping a watchful eye on global energy prices. However, Iran is not the only potential trouble-spot.

The results of Maplecroft’s Resource Nationalism Index show that a full 44 percent of global oil production currently occurs in countries that pose a ‘high’ or ‘extreme risk’ of resource nationalism. In fact, the list includes eight of the twelve members of OPEC .

As Maplecroft defines it, resource nationalism is a rising phenomenon where governments of countries hosting large reserves of natural resources try to secure greater economic benefit from their exploitation or leverage political gain through restricting supplies. This not only has operational and financial implications for extractive companies operating in these countries, but it could create further instability for the global energy markets.

The Resource Nationalism Index identifies the risk of resource nationalism across 197 countries.

Maplecroft included nine countries in the “extreme” risk category: (more…)

Human rights and labor standards risks for companies and investors are increasing on a global scale, according to a new study from the risk analysis and mapping company Maplecroft.

The fifth annual Human Rights Risk Atlas (HRRA) found that nearly half (48 percent) of the 197 countries studied now pose ‘extreme’ or ‘high’ risks of corporate complicity in rights violations. All told, citizens in 95 countries are now exposed to human rights violations by states –that’s a 6 percent increase in countries posing ‘extreme’ or ‘high’ risks to business and investors since 2010.

What’s the reason behind the increase in human rights and labor standards risk? Maplecroft cites three main factors:

• the violent crackdown on protesters by security forces during the Arab Spring uprisings,
• an emerging set of resource scarcity challenges for business, linked to large scale ‘land grabs’ in developing countries by foreign investors, aimed at increasing food, water and energy security at home, and
• the global economic recession continued to challenge the rights of workers and has resulted in a trend for the trafficking of migrant workers for forced labor in countries such as Malaysia, Russia, South Africa and UAE.

Here is Maplecroft’s ranking of the ten countries where there’s the most extreme risk for human rights violations: (more…)

Japan and the US have the highest economic exposure to natural hazards.

But, new research from Maplecroft concludes that the emerging economies of China, India, Philippines and Indonesia pose the most risk to investors –because these countries lack capacity to combat the impacts of a major disaster.

According to Maplecroft’s Natural Hazards Risk Atlas 2011 (NRHA), China, India, Philippines and Indonesia are not only at ‘high’ and ‘extreme risk’ from economic exposure to natural hazards (earthquakes, tsunamis, tropical cyclones, floods, drought, etc);  they also lack the resilience to mitigate the disruption a major event would have on their societies and economies.

Maplecroft points to Japan to illustrate the point. The UN states that Japan has nearly 40 percent more people exposed to tropical cyclones than the Philippines. Yet, if both countries experienced similar sized cyclones, fatalities in the Philippines would be 17 times higher than in Japan.

What’s more, due to the rising economic power of those major emerging countries, the occurrence of a major natural disaster there may also have global economic impacts and severely affect the supply chains of business. Maplecroft advises investors who are currently diversifying portfolios into Asian countries to factor in natural hazards risks into their investment strategies. (more…)

Growth economies are ripe for investment and development, but a new report from Maplecroft reminds us that these opportunities often come hand-in-hand with significant business challenges.

Maplecroft’s Global Risks Atlas 2011, focuses on seven key ‘global risk’ areas, which are defined as risks that have the ability to affect multiple regions and industry sectors, but are outside the control of an individual government or business. The list of seven key global risk areas includes:

• macroeconomic risk
• security risk
• governance risk and illicit economies
• resource security
• climate change
• pandemics
• societal resilience, including human rights

The four countries that top the ranking  –Somalia (1), Sudan (2), Afghanistan (3) and DR Congo(4) –are all rated ‘extreme risk.’ Each of these countries is characterized by weak governance, internal conflicts and regional instability.

However, as Maplecroft points out, business leaders may want pay particular attention to the several strategically important growth economies that are also rated as ‘high risk.’ Nigeria (12), India (15), the Philippines (17), Russia (21) and Indonesia (32) are among the countries driving most of the positive momentum behind the world economy, but Maplecroft rates all of them as ‘high risk.’

Each of these countries face unique challenges, but, with the Philippines (8), Russia (10) and India (11) rated ‘extreme risk’ and Nigeria (12) and Indonesia (28) considered ‘high risk’ in the ‘security risk’ category, politically motivated violence and terrorism must now be a primary concern for investors in these territories. (more…)

Russia is growing as an economic power.

Unfortunately, though, it is also becoming increasingly risky to do business there.

The third annual Political Risk Atlas, released last week by Maplecroft, ranks Russia with 10 other countries considered as “extreme risk.”

The Political Risk Atlas 2011 includes 41 risk indices evaluating 196 countries. It provides a comprehensive appraisal of traditional or ‘dynamic’ political risk areas including: conflict, terrorism, the rule of law, and the regulatory and business environment. The term ‘dynamic’ is used by Maplecroft to describe risks that can change rapidly as a result of actions by government, regional authorities or politically-motivated groups.

The Political Risk Atlas 2011 also focuses on emerging risk areas and structural political risk affecting longer term regime stability, such as resource security, human rights, climate change, infrastructure readiness, education and poverty.

The ‘extreme risk’ countries now include: (more…)