New angle on corporate risks

Control Risks Philippines recently published "New Perspectives on Corporate Risks and Strategic Planning in the Philippines", written by Ben Catteneo, consultant to the local subsidiary of Control Risks Group, a leading international business risks consultancy firm.

Contrary to popular belief, business risks in the Philippines have more to do with corruption and government interference than with kidnappings and the Abu Sayaf, although they continue to dampen investor confidence and could be of specific concern to some business firms.

The undercurrents of the end of the Cold War and the onset of globalization opened up to business a wider variety of corporate risks. In addition to traditional corporate risks of physical and intellectual security, labor unrest and outright corruption, companies now have to deal with the new-found power of NGOs, religious activists, environmental warriors, terrorist groups (in some isolated cases) and growing governmental interference.

Strategically managing corporate risks requires not only understanding which and how groups and individuals can influence one’s business, but also understanding their motivations, sources of support, strengths and weaknesses.

In the Philippines, politics are always very fluid, alliances can be uneasy and the motivations of what may seem to be disparate groups can come together to undermine business interests. As 2004 nears, politicians will seize a variety of convenient issues – power, price of medicine, wages – and will ally witth key groups like NGOs, trade unions, associations and other players to view for votes and campaign contributions.

To those that posses a firm grasp of how their activities impact upon political, economic, social and legal issues and on said groups and understand the motivations and strengths of those groups, strategic planning might even be an opportunity to significantly distance one’s business from the competition come 2004. To the unprepared, the consequences could be quite severe.

Effective strategic planning involves a) full understanding of the impact various "stakeholder" groups can have on your business as well as identifying those groups’ interests, strengths and weaknesses, b) support from key stakeholder groups to create a strategic risk mitigation program and c) the acceptance that relying solely on government and legal mechanisms to ensure the long term viability of your business is insufficient.