Managing Country Risk

Managing Country Risk: A Practitioner’s Guide to Effective Cross-Border Risk Analysis

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Features

  • Describes how to put a country risk assessment into practice
  • Considers the impact of perception on investment decisions
  • Explains how to create a framework, select the right tools, and map out a country risk analysis methodology
  • Includes practical examples and case studies
  • Written by an industry expert with more than two decades of experience

Summary

What would you do if a law that enabled your investment to operate successfully abroad suddenly changed, and your business could no longer operate profitably there? Imagine exporting goods to a government buyer only to discover after the fact that your home country, or the United Nations, has just imposed an embargo on that country.

Managing Country Risk: A Practitioner’s Guide to Effective Cross-Border Risk Analysis explains how to identify and manage the many risks associated with conducting business abroad. Daniel Wagner, an industry expert with decades of battle-tested experience, provides the real-world insight needed to think outside the box and anticipate the impact of change on your business operations.

Using case studies and practical examples, it supplies essential information on country risk management and explains how these concepts apply to every day operational examples. Considering the impact of perception on investment decisions, it demonstrates how to put a country risk assessment into practice and explains how to create a framework, select the right tools, and map out a country risk analysis methodology.

Appropriate for a wide audience—from individual entrepreneurs and small exporters to multinational corporations—the book provides a solid foundation in the basics of country risk analysis. It facilitates an understanding of the full range of cross-border risks and explains how to manage them.

The strategies, concepts, and tools outlined in the book provide you with the understanding needed to help your organization make more-informed decisions about how it does business abroad. Practical examples and case studies provide the real-world insight needed to add value to the risk management processes in your organization and enhance your company’s ability to make a profit.

Table of Contents

Country Risk in Perspective
Insight into the Foundations of the Arab Spring
How Political Change in MENA is Impacting Country Risk Analysis
Perception versus Reality of Risk: Does Terrorism Negatively Impact
Foreign Direct Investment?
The Impact of Perception on Investment Decisions
Managing Country Risk in the New Normal

Foundations of Country Risk Management
Economic Nationalism in Pakistan
Bolivia's Mass Nationalizations
Papua New Guinea's Natural Resource Curse
Defining Country Risk
The Boardroom Vacuum
Separating Fact from Fiction

Assessing Country Risk
Information Sources
Are Ratings Agencies' Ratings Worth Using?
Measuring Political Stability
Comparing Indonesia and Vietnam

Country Risk Assessment in Practice
Creating a Risk Management Framework
Selecting Country Risk Management Tools
Mapping Out a Country Risk Analysis Methodology
Alternative Measures of Country Risk

Political Risk Insurance
What is Political Risk Insurance
An Overview of Investment Insurance
An Overview of Trade Insurance
Underwriters and the Underwriting Process
Case study: Underwriting a Power Plant in Indonesia
The Impact of the Asia Crisis and Lessons Learned

Tales from the Battle Zone
How Easy it IS to Make Costly Mistakes
The Failure of a Bank's Country Risk Management Program

The Importance of Understanding China and Its Place in the World
Geopolitics with Chinese Characteristics
China as the Aggressor - The Case of the Spratly Islands
Asia Looks Nervously over Its Shoulder
The Maturing Chinese-Saudi Arabian Alliance
China's Rare Earth Bravado
China's Great Development Challenge
China's Real estate Syndrome
The Enigma of China's Middle Class
Investor Beware

Shifting Pendulums, Pressing Concerns, and the State of the World
Brazil's and Turkey's Messages
Turkey's Foreign Policy Vision
Upheaval in the Middle East: An Opportunity for Turkey
The Folly of Brazil's Exceptionalism
BRICs Form Unstable Foundation for Multilateral Action
Iraq’s Democratic Experiment
Bolivia, Ecuador, and Nicaragua: Lofty Idealism versus Hard-Nosed Politics
India’s Ongoing Concerns about Pakistan and Afghanistan
Globalization Will Not Change Some Things

Bibliography

Appendix:
Country Risk Management Dictionary of Key Terms
     Country Risk Concepts
     Political Risk Insurance

Notes

Author Bio(s)

Daniel Wagner is the Founder and CEO of Country Risk Solutions (CRS), a cross-border risk advisory firm based in Connecticut (USA). Prior to founding CRS, Daniel was Senior Vice President of Country Risk at GE Energy Financial Services where he was part of a team investing billions of dollars annually into global energy projects. Daniel was responsible for advising senior management on a variety of country risk-related issues, strategic planning, and portfolio management. He created a Center of Excellence for country risk analysis in GE and led a team that produced a comprehensive automated country risk rating methodology.

He began his career underwriting Political Risk Insurance (PRI) at AIG in New York and subsequently spent five years as Guarantee Officer for the Asia Region at the World Bank Group’s Multilateral Investment Guarantee Agency in Washington, D.C. During that time he was responsible for underwriting PRI for projects in a dozen Asian countries. After then serving as Regional Manager for Political Risks for Southeast Asia and Greater China for AIG in Singapore, Daniel moved to Manila, Philippines where he was Guarantee and Risk Management Advisor, Political Risk Guarantee Specialist, and Senior Guarantees and Syndications Specialist for the Asian Development Bank’s Office of Co-financing Operations. Over the course of his quarter century-long career Daniel has also held senior positions in the PRI brokerage business in London, Dallas and Houston.

Daniel has published hundreds of articles on risk management and current affairs, is a non-resident scholar at the Institute for Near East and Gulf Military Analysis, and a regular contributor to foreignpolicyjournal.com, the Huffington Post and International Risk Management Institute (IRMI). His editorials have been published in such notable newspapers as the International Herald Tribune and the Wall Street Journal. His first book - Political Risk Insurance Guide - was published by IRMI.

He holds master’s degrees in International Relations from the University of Chicago and in International Management from the American Graduate School of International Management (Thunderbird) in Phoenix. Daniel received his bachelor’s degree in Political Science from Richmond College in London. Daniel can be reached at daniel.wagner@countryrisksolutions.com or through www.countryrisksolutions.com.

Editorial Reviews

 Many important areas of modern finance lack that one solid, unbiased book that tells both the novice everything he or she needs to know about the subject, brings a coherent structure, and important, fresh insights to seasoned practitioners. Daniel Wagner has brought the world the go-to book on country risk analysis. Managing Country Risk provides a broad, deep, and accurately detailed analysis of country risk analysis tools and techniques in a volume unlike any I have read before. It is both timely and likely to enjoy a long shelf life.
—Jeffrey Christian, Managing Director, CPM Group and author of Commodities Rising

Daniel Wagner has written an excellent, thought provoking, and well-crafted book that speaks directly to the needs of financial professionals tasked with navigating the complex world of cross-border risk analysis. Investment managers, commercial lenders, risk managers, and members of senior management will all benefit from the insights in this book, which provide the tools needed to make stronger, better, and more holistic global investment decisions.
—Peter Went, Vice President, Global Association of Risk Professionals Research Center

Wagner carefully sorts through the fundamental principles of country risk management, adding context with examples from his quarter century as a political risk insurance underwriter, country risk manager and advisor. The chapter on political risk insurance is the best comprehensive description of the product that I have seen. This book is an invaluable tool for the scholar and practitioner alike in understanding country risk and the techniques available to international investors and traders to address those risks.
—Frederick E. Jenney, Partner, Project Finance & Development Group, Morrison & Foerster, Washington D.C.

The first book that combines easily understood text, insightful analysis, and effective strategies to minimize the risks inherent in cross-border business transactions. I consider this book a must read for anyone charged with managing country risk.
—Mark T. Williams, Executive-in-Resident/Master Lecturer, Boston University School of Management, and author of Uncontrolled Risk: The Lessons of Lehman Brothers and How Systemic Risk Can Still Bring Down the World Financial System

I found great value in Daniel Wagner's approach of combining 101 subject matter with graduate level country risk concepts, and was fascinated with the practical examples he used to drive the points home. I would think that this book would be of great value to a widely varied audience, including CEOs, CFOs, risk managers, directors of multinational boards, insurance underwriters and brokers, academics, and public sector practitioners.
—Rod Morris, Vice President of Insurance, Overseas Private Investment Corporation

... a marvelous exploration of a mind trained to integrate all information on all subjects into a coherent viewpoint that produces a business decision. After a long career practicing this kind of thinking in both the public and private sectors, Wagner’s approach, and this book, are a treasure.
—Dr. Paul Armington, President, World Institute for Leadership and Management in Africa

Managing Country Riskby Daniel Wagner who has had years of experience in cross-border risk management, is a ‘must have ready’ reference and reality guide for any trader, investor, lender or NGO considering any cross-border activity. … a very digestible book … . As you prepare for your sojourn abroad, be sure to pack your well read copy of Managing Country Risk which should include your own marginal notes reminding you what to ask and do in order to thoroughly evaluate your own observations and the information you are given.
John Lyman, in International Policy Digest, March 2012