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.”

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High Risk Zones

What locations are currently deemed to
be high-risk? Justin Bowden, CEO of Beltin Group, the solutions provider, lists the following:

EXTREME RISK TO COMPANY, PEOPLE AND ASSETS:

Somalia

* Generalised lawlessness and insecurity continues outside the breakaway Somaliland region.

BUSINESS SEVERLY DISRUPTED AND CRITICAL RISK TO STAFF:

Afghanistan

* Continuing insurgency, including frequent attacks on civilians, as well as coalition and government targets.

Iraq

* Sectarian and ethnic conflicts.

* Insurgency against government and US-led forces.

* Persistent attacks against foreign operations and personnel, including abductions.

SECURITY SITUATION OR COUNTRY INSTABILITY REPRESENTS A RISK TO STAFF, THEIR FAMILIES AND PHYSICAL ASSETS:

Burundi

* Obstacles to the peace process remain, and further delays and suspensions of peace negotiations are likely.

*Fighting and armed banditry continues in parts of the country.

Chad

*Reduced but ongoing risk of a rebels’ offensive launch against the capital Ndjamena.

*Constant instability in the eastern part of the country.

Côte D’Ivoire (Ivory Coast)

*Slow implementation of the Ouagadougou peace agreement.

*Continuing insecurity in the west of the country.

*Although the disarmament of pro-government militias has started, rebels and militias still have a military capability.

*Underlying risk of a coup.

East Timor

*Continuing risk of politically motivated violence.

*Difficulties with safe and ordered evacuation from East Timor, as a result of geography and limited communications.

Haiti

*The security situation in the capital Port-au-Prince remains fragile; violent crime and kidnappings continue.

*The UN and police remain stretched, struggling with gangs and common criminals.

Liberia

*Major security risks remain in most of the country, especially outside the capital Monrovia.

Pakistan

*Anti-western terrorism.

*Unresolved dispute with India over Kashmir.

*Political opposition is generating anti-President Pervez Musharraf attitude.

*Sectarian violence.

Palestinian territories

*Continuing risk of violence between Palestinian factions.

*Israeli military operations against Palestinian militants in the Gaza Strip.

Saudi Arabia

*The terrorist threat will remain for the foreseeable future and further attacks against Western interests. Large-scale attacks, small-scale targeted shootings and abductions, are likely.

Yemen

*Continuing extremist activity.

*Ongoing fear about terrorist attacks against foreign interests.

*Sectarian insurgency in remote parts of the country.

Zimbabwe

*Fragile situation in the country’s major cities, with continuing shortages of fuel and food.

*Potential for internal political breakdown and worsening economic conditions. 

Country Risk 2008

To ensure your business isn’t in the wrong place at the wrong time consult Coface’s Handbook of Country Risk 2008, or read up on the Export Finance and Insurance Corporation’s Country Risk Assessments page.

For more information, visit www.coface.com and www.efic.gov.au

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Travel with Confidence

What to take:

*Passport and visa. Check that your passport is valid for the period of the visit. Check visa dates and whether you need a multi-entry visa. Photocopy or scan relevant pages and send to an email account that you can access while abroad. Take additional passport photographs with you.

*Credit cards.

*Local currency (if it is legal to do so) and ‘hard currency’ (usually $US), including small denominations. Traveller’s cheques and a record of the serial numbers.

*A dictionary or phrasebook.

*A city map, route map, and airline timetable.

*A basic first-aid kit. For countries with inadequate medical services, take a sterile medical pack with syringes, needles, sutures and dressing (in hold luggage). Bring any medication that you need.

*Consider taking a small torch.

*Do not carry items that could cause offence at your destination, such as alcohol or magazines that may be viewed as pornographic.

*Check your personal and medical insurance covers the security and political conditions of the country you are visiting; it may be invalid if your government advises against travel.

*Ensure inoculations are valid for the duration of your visit. Bring a certificate if necessary; some countries require a certificate of yellow fever vaccination.

*Source: Beltin Group, Beltin Focus.

Safe Export Packs

There’s more to security than just ensuring you and your personnel are safe. What about your products during freight? While not much is in your hands during this process, you can at the very least guarantee your products have been safely packed. Service packaging companies supply packaging in all shapes and sizes. Heavy-duty cardboard options are economical and add to the chances of your products being delivered undamaged and on time.

Replacing timber pallets with plastic may also make the journey a little smoother. Other options you can look into for better product protection include internal sleeves and moisture control technology.

There is also the security of your products to think about, and these days the selection of locks is almost endless. You can secure your products using anything from bolts, double bolts, latch guards and shackle protectors, to electronic keyless locks and door damage covers. If you want to go the extra step, safes are always an alternative, and fire-resistant options are available. Ever better, all of these can be custom made for your specific needs.

Online Safety

For any export business, online security is a must. To ensure your business isn’t caught out, Nelson DaSilva, Fortinet Australia systems engineering manager, offers the following security tips for conducting international business online:

1. Spam, adware, and spyware are time wasters. Spam is now one of the most common ways for computer security threats to successfully enter a business.

You can easily protect your staff by installing anti-spam and anti-spyware technology. The latest technologies allow you to protect an entire business with a small, low cost, hardware appliance that simply plugs into your network.

2. Credit card details are valuable. Business computer systems and websites are now targeted in “virtual ram raids”, where the criminals hope to quickly loot credit card details, and your customer’s personal information. The stolen details are often used later to fraudulently purchase products.

Technologies such as firewalls, intrusion prevention, and data encryption can help secure your customer information.

Take special care to protect credit card details. Businesses accepting payments via credit card are expected to comply with Payment Card Industry (PCI) data security standards.

3. Control your connection to the internet. It is much easier to protect confidential business information if you can tightly control information flowing between your business and the rest of the internet.

Network firewalls allow you to control the flow of information between computers, and can be used to prevent outsiders from accessing your systems from the internet.

Website content filtering is a complementary techno
logy, which can give you very fine control over the websites that your staff are able to access. You can control access by time of day, as well as banning any website you like. If you have staff misusing MySpace or Facebook at work, you can easily limit or prevent their access.

4. DIY security could be a very expensive mistake. You don’t need to do it all yourself. Technology security is a very complex field, with many specialist areas. There are many good technology security solutions, but most need installation by an expert to be truly effective.

The good news is that you can readily find help–from simple health checks, through to fully outsourcing the management of your IT security. When evaluating potential service providers, don’t be afraid to ask them to demonstrate track record and provide customer references.

For more information on PCI and access to self assessment questionnaires, visit:

www.pcisecuritystandards.org

For more information on privacy from the federal and state government:

www.privacy.gov.au

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