International Risk Management - safety, savings & security
Knowing the unknown
The risk in an international risk management
program (lame pun...) is that you don't know what you don't know. Sounds fundamental. And it is. But actually overcoming the knowledge gap is a much greater challenge than one might think.
Companies are certainly familiar with risk management - in fact a recent Forbes.com article
, discussing corporate risk management in general, suggested that "91% (of surveyed US executives) plan to reorganize their approach to risk management over the next three years." And they are worried about a myriad of risks including strategic, operations, technology, financial, talent, task, regulatory, geopolitical, sustainability and even social media risk. But while big companies are actively working risk, SMBs are more cavalier - they are lower profile targets, and they face resource constraints for sure.
International risk management - not the place to cut corners
So what's an SMB to do? International business development
is critically important, but risks exist which must be mitigated - and the whole package represents work...work that everyone is too busy to undertake!
The important first step is understanding and acknowledging risk. Simply saying "I'm too small to worry about FCPA enforcement." isn't risk management; it's denial.
As a start, SMBs should acknowledge and understand risk in at least the following areas:
- foreign exchange (FX)
- foreign receivables
- export compliance
- political / market
- international contracts
- product liability
- intellectual property rights (IPR)
Obviously it's not an exhaustive list. Many companies will have labor exposures and perhaps specific product related risks. The good news is that all can be effectively and inexpensively mitigated in most cases. But there are important steps that must be taken preemptively to preserve rights, reduce exposure and mitigate risk. And some effort is better than none.
Don't ignore your gut...don't assume
Evolutionary Marketing & New Markets Blog
Want to know the worst part? Your general business counsel isn't going to highlight these for you. They would naturally be inclined to assist with contractual questions - but might not defer to local counsel early enough - and everyone eats and breaths product liability. And neither will your accountant who may have some suggestions regarding foreign receivables risk (but more likely will suggest you use L/Cs like the rest of his/her clients.)
You're going to have to figure these out on your own. Either by trial and error (hopefully inexpensive) or with assistance from someone with the requisite perspective.
Wondering if Consilium Global Business Advisors might be the right resource? Contact us to discuss your requirements
- known and unknown.Download our free eBook "An Export Dozen"
that lists 12 points even most exporters don't know (including points related to FCPA and trademark risk) and check out our whitepaper on selecting the right international business consultant