Mining: comparative country risk

Client: Africa-based mining company

Concern

Lack of a comparative country risk framework for high-level decision-making

The client is a leading mining company with operations in a wide range of low to high risk jurisdictions. Given the broad spectrum of risks, the client is concerned about how best to compare and report relative risks in countries of operation.

Objective

Oxford Analytica was tasked with building a framework to compare risks and opportunities across countries of operation for the Board of Directors. As part of its fiduciary responsibilities and ongoing commitment to ensuring effective capital deployment and active risk management the client required better visibility and foresight into the geopolitical factors likely to impact its business.

Outcome

Phase I (Measure)

Core risk assessment: This phase presented the client’s country risk team with an outside assessment of relevant macro issues – such as cross-border transfer risks, security, governance, and access – in each country of operation. This approach not only informed the baseline analysis and input assumptions, but more importantly, was used to help counter group-think within the country risk team and local operations.

Phase II (Map)

Scenario planning and stress testing: This phase was designed to support the country risk team with its annual ‘risk package’ to the board of directors. This required a high-level comparative country framework from which the board could compare countries of operation and, in turn, use it to support strategic decision-making.

This entailed blending baseline Oxford Analytica 1-year and 5-year country scores with a custom overlay developed with the client to produce company-specific country scores that accounted for the explicit local exposure of the client within each country. These scores were uploaded into the Value at Political Risk (VAPOR) system along with client asset exposure. This enabled the client to quantify and compare relevant commercial risks in a way that best met – as a starting point – the board’s preference for actionable and easy to digest analysis.

Phase III (Monitor)

Daily Brief:This phase was designed to enable the client to regularly assess key signposts, working assumptions, and potential vulnerabilities in countries of operation.The client monitored developments via the Daily Brief platform