Managing country risk: a practitioner's guide to effective cross-border risk analysis

List of Tables

List of Figures

List of Maps

Preface

Acknowledgments

The Author

Abbreviations

Chapter 1. Country Risk in Perspective

Introduction

Insight into the Foundation of the Arab Spring

How Political Change in MENA Is Impacting Country Risk Analysis

Perception versus Reality of Risk: Does Terrorism Negatively Impact Foreign Direct Investment?

Empirical Studies Can Yield Contradictory Results

The Impact of Perception on Investment Decisions

Risk Management versus Profit Maximization

Be Wary of Statistics

What Statistics Say about the Global Recovery since 2009

Managing Country Risk in the "New Normal"

Notes

Chapter 2. Foundations of Country Risk Management

Introduction

Economic Nationalism in Pakistan

Extractive Enterprises Are Particularly Vulnerable

The Danger of Focusing Too Much on Net Income

Bolivia's Mass Nationalizations

The Importance of History

Ramifications

Papua New Guinea's Natural Resource Curse

It Takes Two to Tango

Systemic Corruption Creates Risk

Lessons Unlearned

Defining Country Risk

Country versus Sovereign versus Political versus Transactional Risk

How Banks Approach Transactional Risk Management

The Lessons of the Asia Crisis

Elements of an Effective Risk Management Process

The Boardroom Vacuum

The Impact on Firm Performance

Separating Fact from Fiction

Notes

Chapter 3. Assessing Country Risk

Introduction

Information Sources

Are Rating Agencies' Ratings Worth Using?

Measuring Political Stability

Comparing Indonesia and Vietnam

Notes

Chapter 4. Country Risk Assessment in Practice

Creating a Risk Management Framework

Selecting Country Risk Management Tools

Economic Measures

Mapping Out a Country Risk Analysis Methodology

Alternative Measures of Country Risk

Corruption Perceptions Index

Democracy Index

Freedom in the World

Gini Coefficient

Global Peace Index

Human Development Index

Youth Unemployment

Conclusion

Notes

Chapter 5. Political Risk Insurance

What Is Political Risk Insurance?

Who Needs PRI?

An Overview of Investment Insurance

Expropriation

Forced Abandonment/Key Operator's Endangerment

Financed-Asset Nonrepossession

Deprivation/Contingent Deprivation

Currency Inconvertibility/Nontransfer

Political Violence

Breach of Contract

An Overview of Trade Insurance

Contract Frustration

Non-Honoring of Letters of Credit

Wrongful Calling of Guarantees

Trade Disruption Insurance

Other Categories

Export Credit Insurance

Underwriters and the Underwriting Process

The Private Sector Players

Chartis

Lloyd's

Sovereign

Zurich

Market Capacity

Private Underwriters

The Public Schemes

The Underwriting Process

Underwriting Trade Transactions

Underwriting Export Credit Transactions

Premium Rates

Pricing Methodology

Recoveries

Reinsurance

Case Study: Assessing the Risk of a Power Plant in Indonesia

Case Study

The Project

Technical/Financial Viability

Host Country Benefits

Insurance Requirements

Risk Assessment

Expropriation

Currency Inconvertibility

Political Violence

Breach of Contract

The Impact of the Asia Crisis and Lessons Learned

Notes

Chapter 6. Tales from the Battle Zone

How Easy It Is to Make Costly Mistakes

A Telecommunications Company in Pakistan

A Paper Company in Russia

A Power Company in Brazil

An Arab Oil Company in Saudi Arabia

An Oil Company in Russia

A Fast Food Chain in Palestine

A Media Enterprise in the Czech Republic

An Energy Company in Venezuela

A Technology Company in South Korea

A Bank in Ecuador

A Pharmaceutical Company in Yugoslavia

An Oil Company in Peru

A Power Company in Canada

The Failure of a Bank's Country Risk Management Program

How the Program Was Revised

Underwriting Information

Creating an Operational Foundation

Recoveries

Note

Chapter 7. The Importance of Understanding China and Its Place in the World

Introduction

Geopolitics with Chinese Characteristics

China as the Aggressor-The Case of the Spratly Islands

Asia Looks Nervously over Its Shoulder

The Maturing Chinese-Saudi Arabian Alliance

FDI with Chinese Characteristics

China's Rare Earth Bravado

China and the Power of the Dollar

China's Great "Development" Challenge

China's Real Estate Syndrome

The Enigma of China's Middle Class

Investor Beware

Notes

Chapter 8. Shifting Pendulums, Pressing Concerns, and the State of the World

Introduction

Brazil's and Turkey's Messages

Brazil's and Turkey's Nuclear Ambitions

Rising Tension with Turkey

The Lesson to Be Learned

Turkey's Foreign Policy Vision

Turkish Foreign Policy: Moderation in the Extreme

Is Turkey Really Rethinking Its Place in the World?

Upheaval in the Middle East: An Opportunity for Turkey

The Folly of Brazil's Exceptionalism

To BRIC or Not to BRIC-That Is the Question

Too Big for Its Britches

Pursuit of Autonomy versus an Adversarial Role

Aid Recipient and Provider

Its Own Worst Enemy

BRICs Form Unstable Foundation for Multilateral Action

Iraq's Democratic Experiment

Bolivia, Ecuador, and Nicaragua: Lofty Idealism versus Hard-Nosed Politics

India's Ongoing Concerns about Pakistan and Afghanistan

Globalization Will Not Change Some Things

Notes

Appendix

Country Risk Management Dictionary of Key Terms

I. Country Risk Concepts

II. Political Risk Insurance

Notes

Bibliography

Index