Managing Export Risks

Some export markets may be high risk from a safety point of view, but they can also be very lucrative. Find out how to make the most of key export markets without compromising your own safety, or that of your employees and products.

Blindfolded and bound for 47 days, Douglas Wood no doubt realised that his cavalier attitude to security wasn’t the right approach, especially while working in Baghdad. Similarly, you don’t want to be bruised and battered, staring down the barrel of an assault rifle, before comprehending the need for precautions. While this scenario is extreme, it’s among the potential risks you face as an exporter, so it’s best to be prepared. 

It isn’t always easy to identify a high-risk location. “It depends on the type of travel being undertaken, and the areas within the country where the travel is taking place,” says Ben Ford, senior economist at Export Finance and Insurance Corporation. Having clocked up quite a bit of travel experience, there are a few locations that immediately spring to his mind–mainly those where there is civil or political conflict, including Iraq, Afghanistan, Somalia, Kenya and Chechnya. “The Niger Delta is an extremely dangerous place but, with the right planning and precautions, a trip to Lagos can be fairly smooth. Likewise, in South Africa, Johannesburg has a bad reputation for violent crimes but most business travellers will spend their time well away from the major crime hotspots,” he says.

So how do you ensure safety in these, and similar areas? Be prepared and get help.

Safety Training

Beltin Group provides intelligence reports to Australian media organisations for the World Cup, and for the Beijing Olympics.

“Beltin works with business to develop policies and procedures that ensure occupational health and safety, and operational output with a focus on protecting people,” says Justin Bowden, CEO of Beltin Group.

Exporters can make the most of risky markets if they have the necessary training and confidence to deal with adverse situations. “Uncertainty about policies, laws and regulations has hampered development of the private sector in many developing countries,” says Bowden. “Entrepreneurs and businesses worldwide feel that the cost of doing business is substantially increased by theft and crime, and in many developing countries the business community feels that authorities do not adequately guarantee their personal safety and do not reliably enforce their property rights.”

Exporters need to move beyond these initial concerns to avoid missing ideal business ventures. To manage risk, Beltin Group offers Hostile Environment Awareness and Safety Training. The program follows up awareness and training with communication; ideally using the Mobile Alert Tracking Equipment Service (MATE), a locator with a global beacon that monitors and responds to personal duress calls.

MATE has other benefits as well. “New technologies introduced to strengthen security can increase efficiencies in trade and reduce trade costs.” If the above security measures fail, extraction is an option, although it is the last step in risk management.

While initiating these processes is an additional expense, you’ll probably find the price is worth it. “The costs of implementing security risk management measures should be viewed as an investment,” says Bowden. “Reducing the threat of terrorism, crime and risk to staff, will reduce risk premiums.”

Extreme Risk

One business reaping the rewards of creating solid business security policies is Risktec Australasia. Currently 93 percent of the crisis and emergency response training provider’s business is made from exports. Risktec began exporting its service to developing markets after finding itself competing against the larger and older training organisations in more mature markets.

If experience has taught managing director Stuart Manifold one thing, it’s to expect and prepare for the unexpected. “The risks are just so varied,” he says. “From your luggage arriving, to being able to get visas into particular areas, to the extreme risks of muggings, theft of equipment, corruption, and the really extreme risks in some parts of the world of kidnapping personnel.”

When exporting its services to countries like Angola, Risktec increases safety by working with local oil companies. “You need to be working with an organisation over there that’s done their homework and has the structure in place to mitigate any risk,” says Manifold. “They’re operating in a country, they’re there all the time, they have all the protocols in place. We won’t go into a country with any risk unless our people are catered for under the security and evacuation protocols of the company we’re working for.”

Risktec has transport guidelines in place as well. “When working there with an oil company, we’re restricted to using only their transport, not walking between offices, not going out at night unattended, and that sort of thing.” With these guidelines, Manifold feels secure in even the most high-risk locations. “Anywhere in the world where you follow the rules, you can mitigate the risk and remain fairly safe.”

Also, Risktec employees are tracked, and must contact the home office on a daily basis.

To date, Risktec’s business has not been adversely affected by the political or economic situations in a country it’s exporting to, and this is not by chance. “It comes down to pre-planning and making sure you’re on top of what happens at the front end,” says Manifold, recommending that exporters research different country restrictions, keep track of the Department of Foreign Affairs and Trade website, and work with overseas Austrade offices. “Those guys will tell you how it is, particularly if you get to know them.”

Ben Ford also recommends consulting the DFAT travel advisory, reading travel guides, discussing travel with colleagues and planning how you’ll get around. “When you are on the ground, stay alert and watch your surroundings. Try to blend in if you can, and make an effort to keep obviously valuable items out of sight,” he adds. “In places where you perceive the risks to be higher, it might be worth investigating hiring a reputable local guide to help you get around.”

Insurance Options

But even the best laid plans can go astray, so insurance is vital. “Some of the other risks in these areas is not getting paid for what you do,” explains Manifold. “We mitigate that by working with the government and other organisations, and insuring all the work done overseas.” While each business will have different insurance needs, he recommends trade, travel and repatriation insurance. These include a certain level of kidnap and ransom insurance.

EFIC’s insurance policies are one option for exporters, providing both political and commercial risk insurance. Everything from political violence to an unpaid invoice can be covered, and insurance is available for extended terms. Cover against losses from defined political risks is available up to 100 percent, and up to 90 percent for defined commercial risks, but small and medium businesses may face some complications, depending on their venture’s risk assessment.

Coface is another possibility if you’re after credit control and insurance. Through its network across 93 countries you’re more likely to have access where you need it.

With the proper contingency plans and precautions, being secure when travelling is not difficult. “Anywhere in the world can be a risky place–Sydney, Perth, Melbourne,” says Manifold. “People just need to be really aware of their own personal environment, their own personal space, be smart, and don’t wander home on your own at three o’clock in the morning after too many beers.”