Managing Risk In Emerging Markets

Many companies are reviewing or increasingly engaged in business in emerging markets. For some, the driver remains a need to find lower cost sources of supply. But for many, it is because established markets do not offer the scale of opportunities needed to support business growth. Overall market and economic conditions are forcing increased engagement with new and unfamiliar markets, for business development and sales.

New market entry and new customer or supplier adoption always entail uncertainty and risk. Some organizations have great experience and a replicable assessment and ‘on-boarding process’ to gather necessary information and manage these risks. But many do not. They are driven by either the need for speed, or overall lack of discipline, to undertake high-risk projects and to learn as they go.

There are growing resources to assist companies on their journey to the unknown. IACCM has data in its learning programs and undertakes periodic research, such as its 2010 study of the major risks within the top 50 trading nations. But a resource that I strongly recommend is the Supply Chain Risk blog run by Jan Husdal (see www.husdal.com). It offers the most thorough and thoughtful analysis of risk topics that I have ever encountered, drawing on and referencing many of the major works in this field.

Although Jan’s work is in some ways more related to procurement and logistics, there is much here for those in sales contracting or commercial management. His recent paper on emerging markets is a good example and I commend it as a place to get started.