Country Risk Reports and Their Limits

globeFor a recent project I took an in-depth look at risk factors in a number of emerging economies, including political, economic, financial, environmental, and regional risks.

A number of firms – such as A.M Best, The Economist Intelligence Unit, BMI Research/Fitch, IHS, and others – offer free or fee-based reports. Some even provide risk scores or ratings that can be compared across countries or over time.

It is important to source a variety of reports to compare and contrast the analysis and methodologies in order to get a complete picture, but as Professor Aswath Damodaran noted in a recent blog post, these reports offer non-market, point-in-time measures that may miss crucial, dynamic information and developments:

There are two problems with non-market measures like risk scores or sovereign ratings. The first is that they are neither intuitive nor standardized. Thus, a PRS [Political Risk Services] score of 80 does not make a country twice as safe as one with a PRS score of 40. In fact, there are other services that measure country risk scores, where high numbers indicate high risk, reversing the PRS scoring. The second is that these non-market measures are static. Much as risk measurement services and ratings agencies try, they cannot keep up with the pace of real world developments. Thus, while markets reacted almost instantaneously to Brexit by knocking down the value of the British Pound and scaling down stock prices around the globe, changes in risk scores and ratings happened (if at all) more slowly.

For my report, I included some recent market measures as well as news items in order to round out the picture, but it is critical to always be explicit about what elements remain outside the scope of research reports.

Don’t Be Melania Trump

trumpobamaBy now most of us have heard about Melania Trump’s plagiarized speech at the Republican National Convention in Cleveland, and most of us – I hope! – have been shaking our heads wondering how it could happen.

The New York Times had a good piece called “How Melania Trump’s Speech Veered Off Course and Caused an Uproar” that delves into the background of this embarrassing episode. This passage, in particular, caught my attention:

It [the speech] reinforces dominant themes of Mr. Trump’s campaign that still linger from the primary, which his team has struggled to change: a deliberately bare-bones campaign structure, a slapdash style and a reliance on the instincts of the candidate over the judgments of experienced political experts, like Mr. Scully and Mr. McConnell.

There is an important lesson in this: Use and trust the experts! In politics or in business, using a bare-bones, slap-dash style and relying on instincts over data and experience will always lead to trouble.

That is not to say one should blindly follow the experts’ advice or not question their track record, but experts dedicate their working lives to their subject areas and build their reputation on their ability to deliver. Their advice and deliverables can be the difference between success and failure.

At FSO Research and Information, we pride ourselves on our well-honed business and due diligence research knowledge and experience, gained through years of practical experience and numerous client projects. It is our job to keep up with information resources and methodologies, and to apply that knowledge and experience to answer our clients’ business-critical questions. We know that Google is not the be all and end all of research, even though we use Google and other search engines expertly. We know the limits of each resource and how to leverage and combine them to build a robust picture.

It is clear that Mr. Trump doesn’t give a hoot about his own reputation or that of the United States, but if you care about yours, trust your research to the experts.

Competitive Intelligence Certificate

Extra! Extra! Read all about it!

The first of the three courses in the new competitive intelligence certificate, offered through the University of Toronto’s School of Continuing Studies, is now open for registration. This is a fantastic opportunity for information professionals to learn about and hone their CI research and analytical skills. I say this not just because I co-developed the course.

In today’s hyperconnected and competitive environment, organizations need to stay ahead of their competition. CI is one sure way to avoid surprises, monitor trends, identify insights, connect the dots between data sets and grow market share.

The Foundations of Competitive Intelligence course will be offered in Fall 2016 and Winter 2017 at the St. George campus. Register here.

Searching for Form D Documents is an interesting and useful new site that helps identify equity or debt investments in startups, growing businesses, hedge funds, and private equity firms in the U.S. on a real-time basis.

As noted by the SEC:

The SEC does not require companies that are raising less than $1 million under Rule 504 of Regulation D to be “registered” with the SEC, but these companies are required to file a “Form D” with the SEC. The Form D serves as a brief notice that provides information about the company and the offering.

A lot of good information can be gleaned from Form Ds, including the amount of money raised, the names of executives and directors, and even the broker commission paid. The site allows searching by company or individual name, making it useful for Canadian searchers looking for competitive cross-border information.

[Via Best of the Business Web]


The 4 Stages of Business Research: Are You Prepared?

StairwayKnowledge is power — we’ve all heard this mantra, but how many of us truly empower ourselves with knowledge when tackling a new business opportunity or project?

In the lifecycle of a project, there are four stages where good, thorough research is critical to business success: when pitching a potential client, before signing the client agreement, during project completion, and after project delivery.

Each stage has unique research needs and specific resources that should be consulted. Googling for information is a good start — but your competitors have Google too. Staying ahead of your competitors and shining in the eyes of your clients requires going beyond Google.

Stage 1: Pitching a Potential Client

You’ve identified a potential client and project to pitch on, you’re confident that you offer what the client is looking for, and you’ve secured an hour of their time to prove your chops.

How well do you know this client and their market, industry position, plans for the future, and projects in development? How do you show them that you understand their needs, their challenges, and the fears and concerns that keep them up at night? How do you establish a personal connection — by, say, casually mentioning an article the firm’s CEO wrote for an obscure industry magazine?

The thoroughness of your research and the depth of your understanding of their situation can be the difference in winning or losing the contract. Industry and market indicators, major players and competitors, the regulatory environment, statistics, trends, forecasts, and the backgrounds of everyone in the room are some key pieces of information to research and understand before stepping into that boardroom or office.

Some information sources to consider are industry associations, statistics agencies, government agencies, financial filings, public records, market research reports, journals and trade publications, news reports and social media, investor presentations, analyst reports, and conference proceedings. Some of these resources are available on the open web and can be accessed efficiently if you use advanced techniques, but many must be purchased through information vendors or retrieved from specialized databases. Consult an information professional about how best to find, access, and leverage these resources.

Even if most of the research doesn’t end up in the pitch deck, you will feel confident and connected to the client’s needs. Here, you can never be too prepared.

Stage 2: Signing the Agreement

Congratulations! You won the project! Before you sign on the dotted line, think about the minefield you may potentially be entering, especially if your client is not a large corporation already under constant scrutiny.

A client’s history with vendors and customers could provide a good indication of what you might expect in their dealings with you. Have they ever declared bankruptcy? Are they currently embroiled in a major lawsuit? Do they pay their vendors on time and treat their customers well? Will they somehow jeopardize your reputation by association?

The same goes for your own vendors and suppliers: Can they do what they say they’ll do? Might they take your deposit and run? Have you validated and verified the information they’ve provided you?

Public records, media reports, and social media can uncover important clues to the above questions. This checklist (PDF) provides some key resources.

Taking the time to perform due diligence on a potential client or new vendor may save you considerable time, money, and headaches down the road.

Stage 3: Completing the Project

The due diligence process went well, you’ve signed the agreement, and now you’re ready to undertake the project. What do you need to know to get started?

It all starts with a well-defined problem. What is at stake? What question or questions do you need to answer? What information do you currently have? What information gaps exist? How will the information be used? The answers to these questions may change as the project evolves, but the relevance and quality of the research will depend on how clearly defined the questions are.

Other questions to ask at this stage are: What are some best practices that you can leverage and apply to your project? Are there experts you can consult and interview to provide information and guidance?

Many of the same resources used in Stage 1 can be used here as well, this time in a different way and with a different goal in mind. Whereas in Stage 1 you were likely looking for high-level information, now you may need to dig deeper, use a wider range of resources, and be cognizant of the nuances of the information. If you’re not finding exactly what you need, you may need to conduct primary research such as interviewing experts or undertaking market research.

Stage 4: After Project Delivery

Phew! The project is complete! You did a fabulous job, delivered the project to the client’s satisfaction, and received glowing reviews. Now what?

How can you leverage this project into other projects for this client and even their competitors? Will you wait for the client to call again or will you be proactive in monitoring their needs?

You probably already have some Google alerts set up for your business. Be sure to add the new client and/or their industry and all the major players to your alerts. These days Bing’s news alerts are even better than Google’s. You can receive customized alerts via RSS, and if you wish to see them in your inbox rather than an RSS reader, you could use a service like FeedMyInbox.

Website monitoring tools (such as ChangeDetection), RSS feeds, and social media monitoring tools (such as WhosTalkin) should also be part of your arsenal. Use them to keep up-to-date on changes that are taking place in the client’s industry, what relevant new products or services are coming to market, and what competitors are trying to do to stay one step ahead.

But, as mentioned above, not everything is available and accessible on the open web. Here subscription databases are again critical for monitoring news and specialty and trade magazines, where the information wheat has already been separated from the chaff.

At each of these four stages, accurate and strategic information can help you reduce risk and maximize your opportunities. Good information is the basis of knowledge — knowledge that can empower you and help your business succeed.

Photo source: Unsplash, Pixabay

Business Backgrounding and Due Diligence Resources

I had the pleasure and privilege of presenting a session last night on business backgrounding and due diligence resources and strategies to the special libraries community in Toronto. I really enjoyed the session, and there was a lively Q&A afterwards where I picked up some tips as well.

Here’s a checklist of resources I created to help guide researchers when conducting this kind of research. It’s by no means comprehensive, but it provides an overview of the resources typically used. Please let me know in the comments if you find it useful.

Business Background and Due Diligence Research Checklist (PDF)

Quick Tip Tuesday: Searching for Corporate Directors

Today’s quick tip is from a presentation I’ll be giving on May 14 on business backgrounding and due diligence research. If you’re an info pro in the Toronto area, please join me for what I hope will be an information-rich session. You can sign up here.

In Canada, corporations can be formed in all provinces and territories as well as federally. However, searching by director name is only possible for a federally registered corporation. You can use the site: command in Google on the Corporations Canada site, or use the Canadian Federal Corporations and Directors database in FPInfomart, though this latter resource is populated by the vendor and is not comprehensive.

Quick Tip Tuesday: Financial Filings

All Canadian publicly traded companies must file documents through their provincial or territorial securities commission. These filings are publicly available through SEDAR.

A little-known tip is that Canadian companies that also trade in the U.S. sometimes have to file there earlier than they do in Canada. So if you’re looking for current filings and your company of interest also trades in the U.S., look for filings on EDGAR.

Quick Tip Tuesday: Company Extensions

If you do any kind of research on foreign companies, it’s imperative to know how the companies are structured. Canadian businesses fall into one of four categories — sole proprietorship, partnership, corporation, or cooperative — and corporations usually carry the designation Inc., Corp., or Ltd.

For foreign companies, there’s an array of other designations and extensions. This page provides a list of these extensions and explains what the terms mean and where they are used. The list also helps narrow your search if you don’t know what country a company is based in.

The Periodic Table of Business Research Databases

I just came across a terrifically handy tool from Alacra called the Periodic Table of Business Research Databases for identifying the right database for business-related research. There are a vast number of databases available on the market, each with its own focus and content depth. This tool provides a nice, quick and dirty overview of most of these information sources, identifying them by the various categories of research (company profiles, credit and investment research, market research, news, etc.).

Unfortunately it is missing some key Canadian databases, such as Infomart and Newscan, but I’ll be bookmarking it.