DECISION-MAKING IN BUSINESS

It is an oft-quoted truism of the business world that “nothing great comes without risk."

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Which is true. We all know risk. And it has the potential to destroy your business. But some commentators, especially in North America, have tried to encourage risk-taking, portraying it as a virtue, as something essential for success in business. The business world today is replete with—at times misguided—optimism, success stories, and the praise of those with can-do attitudes. Little, however, is known about the stories of failure; those cheerful, deserving entrepreneurs who just did not make it, and those who fell prey to the demon of risk. Fortunately, there are ways to minimize risk in almost every area of business.

The use of data in decision-making can help companies avoid mishaps. Rare events notwithstanding, economic patterns tend to recur. A careful study of the economic landscapes of target markets can help you avoid common pitfalls. And the study of target markets is not as difficult as it used to be. Credit insurance companies such as Coface publish periodic country risk assessment reports, as well as sector risk assessment maps, which take into account a multitude of factors ranging from the stock prices of listed companies to the macroeconomic and political landscape of any given country. Coface puts Colombia, for instance, in the risk category “B," while assessing its business climate to be in the “A" category—an altogether impressive ranking for a Latin American country in 2021.These rankings are assigned by the harvesting and analysis of huge volumes of past financial data as well as the company's unique on-the-ground expertise.

Knowledge of risks in a target market is useful not as a piece of specialist information, accessible only to a few. Today, professional risk assessment documents are available to all businesses online and for free. Their study and application have the potential of transforming business ventures. They guide business decision-making, optimizing expenditure and preventing setbacks. Risk assessment is a basic component of planning.

The world wide web democratized businesses' risk assessment capabilities. Just as seafarers in the olden days pinpointed dangerous waters by writing “here be dragons" on their rudimentary maps to help other ships, modern risk assessment companies are shedding light on the strengths and weaknesses of different markets and sectors.

Coface, for instance, enumerates Colombia's strengths as follows: “having ports on two oceans," “institutional stability," and “significant tourism potential," among others, while also warning those who consider venturing into the Colombian market that it is prone to “sensitivity to commodity price movement and the economic situation in the US." Companies face the danger of overlooking difficult-to-predict challenges and emerging risks can easily go unnoticed. Risk analysis company that have a continuous physical presence in the target market are an ally that contributes priceless insights and support., they can keep their ears to the ground in a way that analysts based elsewhere simply cannot.

Credit insurance and risk management companies such as Coface understand the importance of on-the-ground monitoring. Having access to an international network of local offices that dots the map in its entirety is an excellent driver of business and represents a wealth of knowledge for managers. Hattiiean Giraldo, president of Coface in Colombia, explained how in today's world of flight cancellations, risk specialists with a wide outreach have an enlarged role supporting companies. “Coface's clients are the company's focal point. Guaranteeing the long-reach service our members expect has been our priority throughout the pandemic." Having access to that expertise distilled and ready online is an asset that companies should not do without.