Gavin English, Director, IMC Worldwide introduced the panel in international risk management to the conference audience, highlighting the importance of the international market to engineering companies. These markets are currently facing a number of challenges with issues surrounding growth and deficit reduction.
However, he highlighted that the construction sector is still experience growth in international markets and so opportunities are available. However, undertaking business in new markets can be tricky because of issues around tax, insurance, health and safety, intellectual property and security.
Graham Hand, Chief Executive, British Expertise outlined how difficult the UK is going to find it to double its export position. The economic conditions in the UK remain challenging and so for those businesses that have the ability to do so, international markets can provide an opportunity.
To operate abroad he suggested that companies undertake a slot analysis, identifying their strengths and weaknesses. Research on the market they wish to enter is important too, and generally other companies are willing to share their experiences.
It was important, he said, that firms explore areas such as local culture and laws. A country can have a solid legal regime though if it is not often applied it can cause just as many issues. Company registration can be difficult, and generally a local legal partner is required.
In addition, the bribery act was highlighted as something to be aware of when working abroad.
Ted Jones, Chief Executive, NGS addressed the conference about emergency procedures when operating abroad. He started by outlining how these can vary from local incidents that require the domestic emergency services to issues of greater importance where plans need to be put in place for issues such as emergency evacuation.
Evacuation does not always have to be because of a phenomenon such as terrorism, or political instability. The Tsunami in Japan demonstrated how important evacuation plans can be in the event of natural disasters. He pointed out that some companies have been able to evacuate personnel in periods as short as three hours.
Paul Berg, Partner at Griffiths and Armour then moved onto the issue of risk and the attachment of risk to opportunities. Internationally there are examples where insurance could be considered in the same way as tax, with local markets requiring local insurance or compliance with local terms and conditions.
In Europe insurance tends to be very straightforward. In developing markets aspects such a fraud and adequate cover do raise greater concerns. However, he said that as long as cover is adequate there are opportunities for companies.
Simon Sole, CEO of Exclusive Analysis was the final panellist to address attendees. He started by asking a rhetorical question in that if you were to start a pension fund for your child what denomination of currency would you put it in? Not only would it have been an interesting question ten years ago but it is even more prevalent now. Asia is forecast to grow significantly going forward but also hold a significant amount of dollars.
Given this, where are people going to work? Looking at country risk the decision is likely to be based on the specifics of an individual deal and not that of the country profile as a whole. In effect, the question is whether the return justifies the risk? Engineers are used to managing risk, and as such should ideally be placed to deal with strategic decision based on a deal by deal basis.
Author: Economics Correspondent Graham Pontin (email@example.com or 0207 227 882)