@Risk

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…)

Last week, the US-China Economic and Security Review Commission made its annual report to Congress. The Commission analyzes specific areas of the US-China relationship, including:

• China’s proliferation practices

• the qualitative and quantitative nature of economic transfers of U.S. production activities to China

• the effect of China’s development on world energy supplies

• the access to and use of U.S. capital markets by China

• China’s regional economic and security impacts

• U.S.-China bilateral programs and agreements

• China’s record of compliance with its World Trade Organization (WTO) commitments

• the implications of China’s restrictions on freedom of expression.

In the report, the Commission also makes several specific recommendations. For instance, it advises Congress to: (more…)

The recession hit auto suppliers hard, and even though some are now reporting significant fourth quarter gains, others are not out of the woods yet.

After all, some auto manufacturers are still restructuring. Volvo Cars, for instance, is reviewing its supplier base, looking for places where it can reduce costs and simplify manufacturing processes.  Ultimately, the company may cut as many as one-third of its suppliers, Volvo’s purchasing chief told Bloomberg last week.

Volvo hasn’t shown a profit since 2005. But, its new owner –the Zhejiang Geely Holding  Group Co. from China –what’s to turn things around, and improving supply chain efficiencies and alignment has become a top priority.  All told, the company has about 450 suppliers, and of these, the 20 largest supply about 70 percent of Volvo’s parts. This short list includes seatbelt and air-bag maker Autoliv Inc., seat manufacturer Johnson Controls Inc., and Robert Bosch GmbH.

Bloomberg reports that Volvo may trim its suppliers down to 300. (more…)

Companies need to focus more on supply chain risks.

Today’s supplier networks are global, complex and punctuated with significant threats. As a result, supply chain failure is now increasingly common. In fact, a fascinating new study by the Business Continuity Institute (BCI) revealed that, as remarkable as it sounds, more than 70 percent of organizations recorded at least one supply chain disruption in 2010.

The survey also found that: (more…)

In August, Everest reported a third consecutive quarter of increased transaction volumes in the outsourcing industry. But, a new study indicates that companies haven’t optimized their outsourcing processes.

According to Everest, the 12 percent Q2 increase was fueled by Business Process Outsourcing (BPO) services –with deals from banking, financial services and insurance firms (the BFSI sector) contributing one-fifth of overall global market activity, and North America and Europe driving three-fourths of all global transactions.

Market Vista: Q2 2010, Everest’s quarterly report on global outsourcing and offshoring activity, reports global transaction volumes for the second quarter were valued at US$3 billion in annual contract value (ACV). North American transaction activity in the second quarter increased 3 percent but ACV declined by 16 percent compared to the previous quarter. (more…)