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Micro-Political Risk Advisory Services

POLITICAL RISK ASSESSMENT

Political risk is often the most serious but least understood
risk faced by investors

StrategyCorp offers Micro-Political Risk Advisory Services

Canadian companies investing around the globe, especially in developing or newly industrialized countries, must understand how evolving political and regulatory systems, significant events, and different cultural and political norms, will impact their operations or if their investment thesis will be undermined.

 

Why Political Risk Assessment is Important

While developing and newly industrialized countries offer enormous investment opportunity, failing to predict political risks accurately could lead to significant issues later on.

Investment decisions require the best, most comprehensive due diligence. Investors who can uncover relevant but less-obvious information are in a position to better assess the true value of the opportunity, create a competitive edge in bid scenarios or avoid unnecessary financial and reputational risk.

Understanding if political risk can be mitigated can often mean the difference between pursuing or abandoning an opportunity.

Properly identifying and assessing political risk should be an essential part of an investor’s diligence process.

 

THE STRATEGYCORP APPROACH TO POLITICAL RISK ASSESSMENT

The enhanced micro-level political diligence that StrategyCorp provides enables our clients to better identify, measure, monitor and mitigate these less-tangible or less-obvious risks.

Diligence that yields strategic insight can create opportunities and enduring value.

  • We have deep experience evaluating micro-political risk factors involved in specific multinational projects and developing risk mitigation strategies. The firm’s professionals have conducted assessments in the Middle East,  Northern Africa, the Caribbean, Latin America, and across North America
  • Relying on our global network of contacts within the media, NGOs, the diplomatic, and academic world, we provide our clients with the information they need to make strategic decisions, running research through a tight political lens to complement the work done in a traditional financial or legal diligence exercise
  • While no two projects are the same, StrategyCorp follows a proven, rigorous methodology that allows us to thoroughly investigate and assess all levels of political and reputational risk
  • When applicable, we can also serve as a sophisticated buyer and manager of in-country professional services on behalf of our clients

Typical Methodology

  1. Deep Dive
  2. Desktop Research & Analysis
  3. Consultation with Experts & On-the-Ground Resources
  4. On-the-Ground Consultation

TYPICAL RISK ASSESSMENTS

As a foundation for assessing each of these political risk types, StrategyCorp will provide detailed analysis of the political context in the relevant jurisdiction, including geopolitical considerations, regime stability, government capabilities and capacity, etc.

  • Policy, legislative and regulatory changes
  • Political system and key players
  • Electoral threats
  • Taxation
  • License/lease/concession cancellation/change
  • Social license to operate
  • Protests and strikes
  • Bribery/corruption compliance/exposure
  • Expropriation and nationalization
  • Capital controls and currency restrictions
  • Judicial independence

CORE PRODUCT & SERVICE OFFERINGS

Custom country
reports


Detailed risk
assessments


Risk mitigation
strategy development


Local partner identification
and development


Management of overseas
mitigation engagements


 


CASE STUDIES

Infrastructure Investment in Mexico

StrategyCorp was engaged by a Canadian Pension Fund that was considering making an infrastructure investment in Mexico. Our mandate was to assess the political risks associated with the investment, with a particular focus on bribery and corruption risk, and to assess whether such risks could be effectively mitigated.

StrategyCorp designed and implemented a comprehensive research program including a site visit and interviews with a broad range of sources both in Mexico and internationally. Our report presented our analysis of the particular political risks relevant to the project, our assessment of their severity, and a recommended mitigation strategy. The result was that while present, political and corruption risk could be mitigated, and should not be an obstacle for the transaction should the financial and legal diligence prove out.

Contract Involving Disputed Region in Africa

StrategyCorp was retained by a global extractive company to advise on a political risk it faced in Africa with potentially damaging reputational and shareholder impacts. The company’s operations included a contract located in a disputed region of the continent with a permanent UN presence and a sensitive history with respect to human rights violations by state and non-state actors. As is often the case for companies in the extractive sector, the scale of the contract there led to the company being pulled into wider geopolitical issues and ultimately accused of being a force for destabilization.

In addition to evaluating whether the business lived up to all applicable standards, trade and customs laws, StrategyCorp advised on the potential for certain local and national political figures to mount a stronger campaign for divestment and their relative effectiveness in doing so, including connectivity to political actors at home and in key shareholder markets. As a result of our own network in the region, StrategyCorp ascertained the political risk level, identified key actors who could credibly defend the company to local stakeholders, and encouraged the contracting partner to institute a comprehensive corporate social responsibility program focused on local jobs, capacity building and public infrastructure. To demonstrate the effectiveness and legitimacy of these programs, we similarly advised on the most appropriate approach to audit progress and convey the results to a wide range of global stakeholders and the media. Today, even the most ardent opponents of any investment in the region will acknowledge the positive steps the company has taken.

Energy Agreement in the Middle East

StrategyCorp was retained by a global resources company to advise on the design and implementation of a public affairs strategy to help secure the approval of a vital energy agreement involving two nations in the Middle East. The situation was complicated by the complex history of the relationship between the two nations. Our client was concerned that its operations in one of the countries would become uneconomical without this energy agreement. The context, which included the “Arab Spring,” made approval of the agreement an especially challenging objective.

StrategyCorp worked with the client to create an in-depth understanding of the political context and risks in both Middle Eastern countries, and developed a public affairs strategy to help ensure governmental approval of the energy agreement. This strategy involved public opinion research as well as communications, stakeholder management, and government relations tactics in multiple countries, including at the chief of state and head of government levels. The result was the approval of the energy agreement.

STRATEGYCORP CREATES CONDITIONS FOR SUCCESS.
StrategyCorp is the company CEOs call when they have a ‘bet the company’ issue to manage

 

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