What is it?

· Often viewed as security, sometime insurance.
· It has evolved - a more intelligent, business-orientated approach
· More than just consultancy
· The hands-on control of your projects and the mitigation of risk to your investment.
· Risk being contracted to allow you to concentrate on commercial development.
· No strict template - must be geared towards a specific market - each has its own peculiarities.

Pre-crisis

· Throwing money at the good times
· Little control, little understanding of position, huge rewards, no questions asked
· Risk management as it might be called is almost strictly "men in black coats", the expat James Bond mentality
· Good times mean the holes in distributors/partners businesses didn't show - all making money - credit lines increase - good trading histories seem to show a bright future.
· Crisis - down to earth with a bump

The Way Forward

· A return in confidence
· Hedonism gone - care taken - Russia can be a stable place to invest and make money if plans are drawn up and followed.
· Operational risk management changes, just as the business climate is changing

The preliminaries:

· Viability - understand your potential distributors/partners and their strengths and weaknesses; their potential to cause problems if their business looks down.
· Understand if the property you are buying or renting actually belongs to those you think it does.
· Understand that items offered as collateral/on pledge are not on credit or double pledged.
· Trust the legal system but plug the silly gaps which will not help it to work for you. (minutiae which is not relevant in the west, comes to haunt companies when they end up in court)
· Understand the players and circumstances which will potentially affect your projects - especially in the regions (stakeholder mapping).
· Have experts check contracts from the operational point of view and not just the legal (eg. Access to a warehouse in a contract seems fine legally but operationally are you sure you have access to the site and along the path up to the door of the warehouse to be able to make use of your access; and do you have the right to break the seal on the door placed there not by the sub-contractor but by the warehouse owner?)
· Spending a few thousand dollars now can save you millions in the future - you would do it in the west.

The Control:

· Understand the risks to a project, ranging from the basic potential for theft of product to the "virtual means" of losing it. Systems are usually not mature and a second tier control is often required.
· Where necessary - have independent men on site 12/24 hours a day control movements.
· Expect real time information, wherever the project is in Russia - but don't expect the local infrastructure to have the means of transmission.
· The railway system works, trucking has further considerations.
· Audit your distributors/partners stocks, especially where credit is used - this can be explained on insurance purposes - "Trust but Check"
· Relationships should be built on a regional basis dependent upon where the project is - do not expect a Moscow based expert to be able always to perform in the regions.
· Make sure that full contingency plans are drawn up and reviewed regularly. Always try to ask yourself all the "what ifs" you can - no matter how extreme.

The Security:

· As for most businesses - a Moscow security company is not likely to be effective in other areas of Russia - understand what the local situation can provide.
· There are several good companies - but operating procedures are usually lacking - expect western management for full control.
· Foreign firms can often overdo the security thing. It might be better to have a reaction team in place than clutter the premises with ominous looking guards - and doesn't deter your client either. Confirm the most cost-effective solution to security. Eg capitalised costs to long term running costs for guards.
· Governmental and security services have vertical structures which does no allow for clear, free-flow of information. Don't rely on an in-house ageing "KGB" Colonel with "all the right contacts" to sort you out. It sounds impressive and James Bond-like but is invariably incorrect.
· Ensure your security provider is licensed and commercially aware to the extent that he understands you are there to do business.