Parachuting in the experts

The mainstream train of building investment expertise in the emerging markets rests on the twin tracks of speed and economy. Yet, predicting major market and political movements cannot be built upon expert local knowledge after two days at the airport Hilton hotel. The changes just after the army onslaught on civilians in Beijing’s Tien An Men Square or the events following Gorbachov’s fall from power in 1990, or any Latin American putsch cannot be evaluated by an armchair expert who is in the country on a whistle-stop tour. This cannot be cost-effective in the long run as the local knowledge gained is superficial and the chances of committing market mistakes are commensurately higher.
A real-life view of handling risk means messy problems – and that requires managing operational risk effectively. Many companies are poorly structured to handle operational risk overseas; in fact, they behave more like risk-ignorant investors.