The North South Korea Tension

Arapahoe SG

Here is the question how do u evaluate the level of escalation within the Korean Peninsula until you make the decision that its time for international business to pull out completely?

What criteria do u look at?

My global clients are asking this question?

weasel1962 SG

Business community may have different perspectives.

When anyone invests into a country be it China or SK, they would already have taken into account country risk eg war. The potential write off would have been factored into the level of investment.

If one has built a factory, it would be difficult to pull out as any shift requires a significant amount of time. The alternative is to set up back up facilities where Singapore is a favourite location.

Having said that, some risk managers don't factor such risks eg Morgan Stanley may not have factored the correct level of country risk into their risk assessment when assessing Shin Corp deal for Temasek.

Stocks are a different matter. Some fund managers tend to leave it to as late as possible in case war doesn't materialise and they pull out too early. Others take a long term view and might sacrifice some returns for less risk eg they don't invest at all in certain countries or sell some ie reduce portfolio exposure when incidents happens. That's why when there are incidents, stock market fall. Portfolio management dictates diversification of portfolio ie not all in one basket to reduce.manage risk.

Hence I would say its a gradual process of reducing exposure as risk increases rather than once off pull out based on triggers.

Arapahoe SG

Well its not so much of physical establishment but rather the intangible aspect such as your personnel resources, informations, Datas, and protecting the value of financial asset.

I gather there are risk level at each escalation point, and I also gather is that u do not wait until bullet start flying. So at what level u start to make business contingency plan to pull out the ?

we are lookin at a systemic level of escalation.

weasel1962 SG

Well its not so much of physical establishment but rather the intangible aspect such as your personnel resources, informations, Datas, and protecting the value of financial asset.

I gather there are risk level at each escalation point, and I also gather is that u do not wait until bullet start flying. So at what level u start to make business contingency plan to pull out the ?

we are lookin at a systemic level of escalation.

BCP (or business continuity plans) does not have to wait until emergency to be developed. BCP may have its own planning for resources and may not require personnel shifting (but it depends on each company's requirement).

Most bcp will only activate when emergency happens ie actual war starts or when one know its going to start imminently eg troops get called up. Normally, foreign embassies/state dept/MFA will start issuing country risk/travel notices and that's a good gauge/benchmark. Travel notices could involve escalation eg warning first and then prohibition.

Shifting anything even intangibles will still take time and effort. Computer info is normally already backed up in another country and if there is a risk, then the impt info is backed-up more frequently to minimise info loss.