Risk Management in Emerging Markets: How to Survive and Prosper

331 Pages·2002·3.232 MB·English

by  Carl Olsson

Risk Management in
Emerging Markets
Risk Management in
Emerging Markets
How to survive and prosper
CARL OLSSON
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First published in Great Britain in 2002
© Pearson Education Limited 2002
The right of Carl Olsson to be identified as author
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with the Copyright, Design and Patents Act 1988.
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regard to the accuracy of the information contained in this book and cannot
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ISBN 0 273 65618 X
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To Stewart for inspiration.
To Hilary for patience.
“Companies increasingly have to do business with emerging markets to
keep their competitive advantage, but the risks involved are quantitatively
and qualitatively different from these in more developed economies and
have important cultural dimensions. In Risk Management in Emerging
Markets Carl very clearly helps the reader understand the nature of the
unique risk encountered in emerging markets and discusses a variety of
methods for managing such risks in a clear and accessible way. The book
captures significant practical experience in a field and markets that risk
managers can no longer afford to ignore.”
Michael (Mike) Frow, Chief Executive Office, Harris Trust Bank
“Carl’s lively, comprehensive and refreshingly readable book is built on his
extensive practical experience in emerging markets banking. It is characterized
by easily understood explanations of the technical concepts, as well as real–life
insights and examples, from the Titanic to Thailand, that will often prompt a
wry nod of recognition. This is essential reading for positive–minded risk
managers in changing markets, whether emerging or developed.”
Mick Green, General Manager, Retail Risk, ANZ Banking Group
“Much needed, practical and very readable. This excellent book will be
welcomed by those with business in emerging markets and especially by
banks operating in these risk challenging environments.”
Tony Jennings, Senior Advisor, Bank Training Centre, World Bank
Group, Mekong Region
“There can scarcely have been two more salient concerns for senior managers
in multi-national companies over recent years than the management of risk
and the exploitation of emerging markets. It is something of an achievement,
therefore, for Carl Olsson to have brought these two key issues together under
one heading. Olsson’s text not only provides a comprehensive introduction
to the subject of risk management in all its many and varied guises but also
shows how the principles of risk management can, and indeed should be,
extended to exploiting opportunities in emerging markets. Many case studies
enliven this text and make it an indispensible guide for managers and students
of management, seeking to explore this very topical subject.”
Ian Turner, Director of Graduate Businss Studies, Henley
Management College
“This book offers a refreshing approach to the appreciation of risk man-
agment. Olsson is to be congratulated for his practical and novel approach
to the subject – an essential read for all students.”
Professor Joseph Nellis, Head of Economics Group, Cranfield
School of Management
Acknowledgements
It is said that everyone has at least one book in them but in reality most
never get past the idea stage. In my case, I must thank ex-boss Mike Frow
for handing me the task of putting together an internal training course
which meant I was required to think about risk and risk management,
determine what the key messages were and consider the best way to get
them across to an audience of recently joined graduates. Over the past
four years I have delivered many such courses and have updated the con-
tent regularly as risk issues have come to the fore and techniques for
managing risk have changed. Preparation for and feedback from these ses-
sions helped me develop a number of the ideas which have formed the
core of the risk management section of this book.
For actually suggesting the idea of writing the book and moving it
beyond just an idea I owe a significant debt to Stewart McNaughton who
conceived the project and then helped me through the initial stages. Since
then he has provided constructive criticism as the book has passed through
many iterations.
Along the way I have had input from a number of colleagues at
Standard Chartered Bank, past and present, as well as others who have
helped me to understand risk and risk management better and/or have
provided useful feedback on various drafts of the text. Those worthy of
special mention are Geoff Burgess, Mani Ilangovan, Daniel Mwagi and
Ting Zhang. There are countless other friends, colleagues and customers
that I have worked with around the globe over more than 20 years that are
too many to name but should be recognized. They have provided me with
a wealth of experience, “war stories” and case studies that I have been
able to draw on to highlight some of the issues that arise when seeking to
do business in emerging markets.
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viii Acknowledgements
I must also thank Laurie Donaldson from Pearson Education who was
receptive to the idea of the book and has guided and encouraged its
progress as it has unfolded chapter by chapter.
A final thank you has to go to my wife Hilary who lost sight of me for
many an evening and much of the weekends for several months during the
preparatory and then drafting and redrafting stages. A thank you goes to
sons Ian and Neil who also did not see as much of their father as they
probably should have during this period.
Needless to say I take full responsibility for the ideas and concepts
explored within the book. Comments and feedbacks would be most wel-
come. I can be contacted via e-mail at [email protected].
Carl Olsson
About the author
Carl Olsson studied Economics at Cambridge University before joining
Standard Chartered Bank, a UK based banking group with operations in more
than 50 countries largely in Asia, the Middle East, Africa and Latin America.
After initial training in the UK Carl was relocated overseas and lived and
worked in various emerging market countries, including India, Hong Kong,
Bahrain, Turkey, Thailand and Brunei, over a period of nearly 20 years. He is
currently London based where he works in Group Risk Management function
of the bank where he is involved in a variety of risk related projects which
have a global reach. In the last few years he has become more involved in
developing and delivering risk training to internal and external audiences.
During his time overseas Carl held a variety of positions in both front and
back office which included senior management positions in business and risk
units. A substantial period of time was spent working with multinational
companies who were either running or seeking to establish operations or
undertake contracts in emerging markets. In addition, he had considerable
exposure to business issues in these countries from dealing with large local
corporates and small businesses as well as non-profit organizations such as
the Royal Brunei Yacht Club where he was Honorary Treasurer.
In addition to a degree in Economics he has obtained ordinary and degree
level banking qualifications and an MBAfrom Henley Management College.
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