Quantifying non-financial data: What is important? How do you
collect it? How to analyse it and communicate it in a meaningful way
Dr Kevin Franklin, November 2012
Contact: info@maplecroft.com
www.maplecroft.com
Introducing Maplecroft
What we do:
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Analyse, index and map 500+ global risks across
197 countries within 160+ indices
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Deliver meticulously-researched, client-focused
and interactive solutions
We support clients to identify, assess, monitor and
manage extra-financial risks i.e. externalities:
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Political, reputational, legal, security, and terrorism
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Economic, business, bribery and corruption
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Societal, human rights, and sustainable
business/development issues
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Environment risks and natural hazards
Who we are:
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100+ team of software, GIS mapping, indices and
research analysts and experts
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Senior management team of 10 directors and
associate directors. Professor Alyson Warhurst
(CEO) and Ed Cole, founding directors
 Maplecroft is a signatory of both the UN Global Compact and the UN
Principles for Responsible Investment (PRI). Our strong support for the
UN Global Compact is reflected in the alignment of our business model
with the 10 Principles: The core purpose of our products and services is
to enable our clients to manage risks and conduct business in a
responsible way. Our latest (10/2012) report “Our Communication on
Progress to the United Nations Global Compact” is available on our
website at: http://maplecroft.com/about/unsi/
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Structure …
The opportunity / risk landscape
Defining what is important?
Determining how you collect it?
Analysing / communicating in meaningful ways
 Case Study 1: Political risk – oil and gas
 Case Study 2: Supply chains – retail / food and beverage
 Case Study 3: Investment – financial services
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Key growth markets – outperform developed economies
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Top-down risks – complex political landscape in 2012
Maplecroft Political Risk Atlas 2012 paints a complex picture of political risks with
concentrations of elevated short-term dynamic political risk found in sub-Saharan Africa, the
Middle East, North Africa, Southern and South-east Asia
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Political Risk Atlas, building comparable metrics …
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The emerging growth environment in 2012 – four key risk areas …
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Political instability in MENA likely to continue with volatility in Bahrain, Yemen, Egypt,
Libya and Syria persisting. Islamist militant groups are seeking to exploit the unrest, in
addition to growing uncertainty in respect of the new legal and regulatory environment
A worsening macroeconomic environment in several advanced countries, particularly
in Europe (Greece, Spain, Ireland and Italy), will generate increased risk, which will have
wide implications for emerging markets exposed to European economies
3
2
3. High levels of conflict and political violence in Sub-Saharan Africa, the Middle East
and South Asia, particularly in growth and resource rich economies like – Nigeria and
Pakistan, with an increased risk of resource nationalism in these regions
Worsening political freedoms and human rights environment with business facing
risk of complicity with oppressive regimes in 75% of the emerging growth economies,
particularly Iran, China, Pakistan, Egypt and Viet Nam, generating constraints in respect
of access to finance and political risk insurance and risk of contract reviews
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Defining the issues most relevant / material to your business
Political
Economic
Social
Environment
Dynamic Risk
Legal and Regulatory
Environment
Human Rights Risk
Carbon Resources
Human Security
Climate Change Vulnerability
Governance Framework
Political Violence
Business Integrity and Corruption
Labour Rights and Protection
CO2 Energy Emissions
Conflict Intensity
Corporate Governance
Civil Liberties and Freedoms
CO2 Land Use Emissions
Terrorism
Debt
Access to Remedy
Geophysical Risks
Business and Macroeconomics
Digital Inclusion
OTHER
Hydro-Meteorological Risks
Resource Nationalism
Economic Diversity
Capacity to Contain Infectious Disease
Natural Hazards Economic Exposure
Forced Regime Change Risk
Emerging Powers (BRICS)
Disappearances
Socio-Economic Disaster Resilience
Structural Risk
Energy Security
Displacement
Sustainable Energy
Complicity with Oppressive Regimes
Financial Inclusion
Education
Biofuels
Supply Chain Complicity Risk
Financial Market Risk
Food Security
Water Security
Societal Resilience
Fiscal Risk
Health and Safety
Resource Security
Growth Competitiveness
HIV/AIDS, Malaria, TB
Infrastructure Readiness
Macroeconomic Stability
Poverty
Economic Diversification
Regulatory Framework
Transport and Communications
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Horizontal axis: a systematic / structured approach to risk management
Continuous improvement …
Development of report
card/proof of monitoring
Policies, guidance
or procedures
Definition of roles
and responsibilities
ACT
Internal and external
reporting i.e. disclosure
Audit/Assurance
!!
Development of strategy
including goal, action plan
and timeline
PLAN
Stakeholder
engagement and
internal capacitybuilding through
communications,
dialogue, materials,
training etc.
CHECK
Communication
Implementation
DO
Target setting
Monitoring and
data capture
Risk identification and
management
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Example: Briefings and in-depth reports
 Off-the-shelf or customised country risk
and other specialist reports
 Briefings: 3-10 page summaries
 25+ page reports available for all countries
– can be customised to sub-national
regions or specific sectors
 Analysis, risk indices, trends, case
studies, stakeholder viewpoints, subnational mapping, key recent events
 Highlight risks to support pre-investment
screening tool or risk monitoring
 Can be tailored to include
sector/regional focus
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To enhance visibility …
 The countries where most growth is occurring and thus where investment will be
required are higher risk in terms of rule of law and legal and regulatory environment, as
well as broader political risk, human rights, labour standards violations and corruption.
 Sovereign bonds, company investment etc. are increasingly exposed to fast changing
extra-financial country risks, that need to be addressed to avoid defaults, maintain
profits i.e. to deliver on fiduciary duty.
 Potential mechanisms to make more informed decisions:
 Sovereign evaluations should address and monitor a wider set of ESG issues
 Investments should acknowledge the footprint / risks of company operations, both at
a national level and also for regions within countries
 Learn more about how companies are innovating to be more responsible and
proficient i.e. to manage, mitigate and transfer risks
… think about “resilience” / upside in addition to pure ESG risk scores …
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Forthcoming webinars:
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Wednesday 21st November – Long-term investment projects in growth economies: Sub-Saharan Africa, MENA and Latin America
Thursday 22nd November – The Climate Change and Environmental Risk Atlas 2013
Friday 30th November – Emerging Powers Integration: risks and opportunities of economic integration with growth markets
Monday 10th December – Human Rights Risk Atlas 2013
Friday 14th December – Syria: The Regional Implications of Conflict
Monday 14th January – Children’s Rights and Business Principles: suggested approaches for responsible business
Tuesday 15th January – Legal and Regulatory Environment Atlas 2013
Thursday 17th January – Climate Change and Environmental Risks Atlas 2013
Wednesday 23rd January – Political Risks Atlas 2013
Friday 25th January – Human Rights Risk Atlas 2013
Thursday 31st January – Risks to Business in Turkey
Please see here for a full listing of Maplecroft’s upcoming webinars: http://maplecroft.com/about/gr_presentations