Risk management in an international context

The aim of this thesis is to review existing literature on international risk management and then compare it with the case study of a Lebanese company in Gabon. The first part of this thesis, the theoretical part, explains the theory dealing with the characteristics of international risk management. I will define the notions of risk, international risk and risk management. Risk management is crucial nowadays because it helps firms to become more competitive and it increases the survival of a business when confronted with hazards. Then, I will explain the process of managing international risk. In order to determine market risk, risk managers need to identify potential risks, to measure their probability of occurrence and severity, to determine the means of handling them and to implement decisions. The section on the characteristics of international risk management will end with an explanation of how multinational companies organize their structure according to risk management. In the second part, I will describe traditional risks as they are classified by their origin levels. The risks are: foreign currency exchange risk; business interruption; economic, political and cultural aspects of country risk; transfer risk; terrorism; global trend risk; and finally migration risk. The aim is to define those risks and to explain how the risk manager can handle them. Finally, the third point of this first section is about emergent risks: cyber, environmental and reputation risks. These risks were chosen for two reasons. Firstly, risk managers, from the past few years, have cited these risks to be among their increasing concerns. And secondly, all companies face these risks because they are vulnerable to experiencing them. We will define those three risks, shed light on why they are classified as emergent risks and review the practices used to manage them. After a review of the existing literature on international risk management, a qualitative case study has been designed in order to analyze the research question, “What are the established management practices of a Lebanese company located in Gabon for coping with international risk”. For this qualitative survey, eleven in-depth interviews were conducted, a six-month direct observation of the company was made and informal qualitative discussions took place. This case study’s research aims to describe key elements of the company’s risk management practices and to analyze these elements in parallel with the theoretical part of this thesis. Results of the study have shown that the company’s risk management practices can be grouped into thirty-three key elements that can then be regrouped into categories such as: global and financial strategies of the company, product range and orders, internal organization, reputation, human resource practices and security.