Risk assessment for multinational expansion into Middle East and Africa

¶ … threats to a company is one of the most important elements of the smooth operation of a multinational company. An effective risk assessment plan is noted by Price Waterhouse Coopers to be necessary for any given company to be successful (PWC,2008).There is aneed for the risk assessment to be tailored to meet the specific requirements of the business and its prime location. The work of Clifford (2004,p.288) noted that a well researched and respected safety and security plan of response is one which is the most effective in the prevention of the target environment against emergencies, accidents as well as any other form of response that may produce a potentially disastrous response. In this paper, we present an elaborate assessment of the potential threats to a multinational company as it expands its operations to the Middle East and Africa.

Potential risks

Some of the potential risks that may affect a company expanding its operations to Middle East and Africa are presented below.

1. Terrorism

2. Crime (serious and organized crime)

3. Natural Disaster

4. Public Disorder

5. Domestic extremism

Terrorism

Terrorism

The U.S. department of Defense define terrorism as calculated use of unlawful violence as well as threat of unlawful violence to breed fear; intended intimidate or coerce governments as well as societies in the pursuit of goals that are basically political, ideological or religious (Burns, 2011).The work of Gunaratna (2006) indicated that Al-Qaida terrorist network has a lot of influence in most Middle East and Northern African countries. This means that any Western company is at risk of a terrorist attack. An enterprise-wide risk management strategy should therefore be developed by the company in order to prevent or mitigate the effects of terrorist attacks. These attacks are eminent in Middle East and Northern African countries.

Natural disaster

A natural disaster is noted by Wisner et al. (2004) to be a major adverse event that results from natural processes of the Earth, or affecting it such as floods, tornadoes, tsunami, hurricanes, cyclones, earthquakes, volcanic eruptions, heat waves, avalanches etc. These are most likely to be experienced in Middle East and Africa in almost the same magnitudes/levels of severity.

Public disorder and domestic extremism are most likely to affect companies operating in Middle East as compared to the ones operating in Africa

How the threats presented affect operations such as shipping, personnel security, and business continuity.

The threats presented above are most likely to presented affect operations such as shipping, personnel security, and business continuity in various ways. Terrorism for instance is most likely to disrupt supply chain/logistics of the company. It can also threaten the personnel thereby directly interfering with the business continuity of the given business. The level of terrorism could be too high to bear and this might force the company to close shop or relocated to other less risky environments. Crime such as piracy has a more direct influence on the business continuity and operation costs of the company while white-collar crime can affect the profitability and hence business continuity of the business. The effects of a natural disaster may directly affect the security of personnel, supply chain and in some cases the operations (business continuity of the company).

Conclusion

Every business should adopt an enterprise-wide risk management plan aimed at ensuring that the supply chain, personnel and business continuity is ensured. Every multinational preparing to expand to Middle east and Africa must employ sound risk management programs in order to ensure that their assets are safe from the threats outline above.