By: Trevor Jones, Co-Founder at Lynx Global Intelligence
Managers and decision makers often make comments to me along the lines of:
“It’s difficult to make the case to my department that we need political risk analysis when leadership simply relies on the news to price-in what’s happening in our markets…”
When I hear statements like the one above, I’m always surprised. It is alarming to consider that large companies who perform business operations on multiple continents will leave their political risk analysis to in-house employees. I have also seen the harmful effects of treating the international economy as a system without risk. Here are some hazards of not considering political risk assessments:
1. News bias. No news source can replace due diligence conducted on the ground. Mainstream media operates in sensationalism, not in the ground truth. Detailed information about forecasts, market trends, emerging developments, country knowledge, organizations, and their strategies is crucial to stay competitive. Traditional news sources are a poor resource for crafting contingencies around political risk. A proactive approach can be the difference between rebounding from, or suffering because of, international events.
2. Manager bias. Not only are news sources limited in scope, but so is the ability as individuals to process information. That is why there is growing demand for intelligence tools that keep companies safe and profitable. These tools range from cybersecurity packages to tailored research on the ground. The aggregate information acquired from these tools are fed into our proprietary system at Lynx, allowing for a complete picture of the “ground truth”, free from the bias of any individual source.
3. Time efficiency. Managers are often focused on keeping a workforce productive, not assessing external risks. Nothing can replace the value of a regional expert who
can quickly bridge gaps and educate others about risks and opportunities in a specific country or area. Lynx’s experts not only have strong analytical backgrounds, but have lived in the places they analyze (and speak the language, too).
My response is the same when I receive statements like the one at the beginning of this article: “Ignoring politics in business is fatal.”
Written with edits by Lynx Fellows Matthew Bebb and Marc Babel.