Why Firms Need Geopolitical Risk Simulations, Not Just Reports

You walk into your office at 7:45 in the morning. It’s a typical Tuesday, and you’re getting ready to call the strategy, policy, legal, and public relations teams together to deal with an ongoing situation in a country that’s blocking access to your service. Unbeknownst to you, President Donald Trump has just tweeted about your company. Your phone starts vibrating. You check the notifications and realize what’s happening. All hell is about to break loose- supporters are praising you, while critics are urging a boycott. You know that a response of some sort is necessary, but this is only your third week on the job. You sit down at your desk and pull out the employee handbook. Unfortunately, there is no section called “When a World Leader Tweets About You.” Now what?

This is an extremely exciting time to be involved in global affairs and international business. But one’s excitement about potential opportunities is another’s paralyzing uncertainty about the potential pitfalls. Political risk, defined as any change in a company’s business and security operating environment, abounds. This is true both in traditionally risky frontier markets and increasingly in developed countries, especially following events like the election of Donald Trump, and the continuing fallout from Brexit. Geopolitical risk is not just a concern for investors, nor does it only manifest in vacillations in the financial markets, as I’ve written about previously. For startups especially, who often fail to realize how political risk can deal a deathblow to operations, it is not always obvious how an engineering team’s action could affect or be affected by geopolitical risk. Most engineers have never taken a course on political risk, or witnessed how a tweak in code or app capability can hamstring another team’s work or be seen as a threat by a government. But rather than exploring the ways that political risk can affect their operations in depth, most companies continue to rely on the vague, quickly outdated, and largely useless reports that traditional risk consultancies provide.

Has a report ever truly changed your mind after you had made it up? Unlikely. There are several reasons for this, some of which I’ve discussed in earlier posts. First, many reports are commissioned after a decision has already been made, to serve as confirmation or to tick a checkbox on a compliance form, and as a result, only the most basic questions are asked. The desire is to be proven right, not ask tough questions that could jeopardize an investment or rollout. Second, reports are usually written by fresh out of grad school analysts who only have a cursory understanding of how the business they are informing actually functions. Consequently they are unlikely to appreciate the complexities of the decision being made or the need to consider and account for the likely second and third order effects. Third, the report is likely to be based largely on only what the analyst can Google from his or her desk under a tight deadline. Not surprisingly, this means the analyst’s — and most importantly — the client’s biases go unchallenged. Finally, the reports are rarely read; executive summaries are skimmed, but rarely with an open mind. It’s the business equivalent of TL;DR. Is it any surprise then that many decisions appear to have been inadequately contemplated?

After seeing this cycle repeat itself for years and across industries, including mining, logistics, higher education, and tech, I’ve come to the conclusion that although the written word is powerful, it is neither adequate for helping clients understand their exposure to political risk, nor useful for empowering them to make decisions, address their vulnerabilities, or seize opportunities, on its own. Once views are deeply entrenched, and confirmation bias and group think take hold, the written word has limited effectiveness in challenging opinions, changing minds, or improving actions. To change a mind requires changing perspective, a task most effectively accomplished by exposing a person to an experience that tests their views and forces them to make decisions under less than ideal conditions. Immersive experiences allow a subject to see what happens when theory, or bias, meets practice. That meeting is often messy, but it’s also frequently the chaos from which the best ideas can emerge. As I like to say, expectations rarely survive first contact with an experience. The level of intricacy that a robust simulation conveys is far higher than would ever be possible in a written report.

You wouldn’t want to be taken to a trauma surgeon who has only read medical texts. And you wouldn’t send a soldier into a critical battle after he has only read a field manual. We require that these professionals practice their craft against the unpredictable — through residencies and war games, respectively — because many emergency surgeries and firefights do not go exactly, or even remotely, as planned. Immersive learning is not just for high intensity professions. Studies have repeatedly shown that people learn just about anything better by doing- practicing procedures, experiencing simulated ethical dilemmas, and acting out decisions. Think about how you learned in school- the teachers did not just hand out a pamphlet on evacuating during a fire or active shooter situation; we all practiced these drills regularly, with different circumstances. It’s the same with businesses and political risk. You can’t just give a handbook to employees and trust that they’ll automatically know how to respond to a stressful situation or make a difficult decision without having ever practiced it.

This is all precisely why I’ve turned my focus towards helping my clients via customized, interactive, immersive simulations. These simulations help the client to diagnose their vulnerabilities (information stove-piping, lack of clear chains of command, unusual circumstances, etc.), anticipate and analyze major decisions, identify shortcomings in processes, and train their staff members in more effective protocols. In these simulations, participants play their own roles, and communicate via their normal channels (whether chat programs, email, texts, or in-person conversations), meaning there are no complicated instructions to learn. These exercises take place at their headquarters, in familiar surroundings, meaning clients get the truest possible view of their own operations under stress. Injects, or pieces of information that drive the plot of the simulation, are customized to look like the real information that employees handle everyday, whether tweets or news articles for the public relations team, or technical readouts for the cyber security teams, designed by subject matter experts who are intimately familiar with the realities such teams face. The situations that clients confront are constructed based on rigorous analysis of crises that the firm has faced in the past, decisions that they’re actually struggling to make, or situations that they repeatedly encounter and want to train their staffs to address more effectively.

I’ve seen participants go from being upset at having to attend such a simulation to actively engaging in the process, and suggesting new practices to help address problems or anticipate challenges, all in the span of 3 hours. I’ve never seen that happen as a result of a report. And that’s why clients are increasingly requesting this service- they see the change in their employees, and they see the tremendous benefits of taking a day to engage in a simulation vs. the expense and lack of utility associated with vague and quickly outdated reports.

While no simulation can predict the future, well-crafted ones can simulate the chaos of a crisis or the pressure of a major decision, allowing you to troubleshoot and develop more effective processes. If you were the executive in the story above, my simulation would’ve addressed the potential for a vocal political figure to bring sudden social media attention to your company. Your team would have been forced to weigh multiple response strategies that address the immediate crisis, while still dealing with more systemic issues, like the government that is blocking your users. Instead of just having pondered it yourself and giving in to your biases, you’d have the opportunity to harness the thoughts and ideas of members of teams across your organization, to understand the situation from the multiple perspectives, and to anticipate the various consequences of the options. You would have had to challenge your biases, and experience how unconfirmed assumptions can exacerbate a crisis. You would have learned how to find or analyze information, verify its authenticity, share it with people who need to be aware, prioritize actions and decisions, and work with other executives to form a cohesive and complementary response. By facing the simulated experience in its full dimension and complexity, you’d be ready to bypass the disorientation of an actual chaotic situation and instead find yourself empowered to make the most of an opportunity.

Milena Rodban is a geopolitical risk consultant and simulation designer based in DC. She can be reached via Twitter (@MilenaRodban) or email (milena@milenarodban.com).

Why Tech Firms Need Geopolitical Risk Consultants

A few months ago, I wrote a post that made a splash: Why Rockstars Need Geopolitical Risk Consultants. Since then, a few notable musicians have failed to heed that advice, including Nicki Minaj, who performed in Angola to fierce backlash, and Enrique Iglesias, whose concert in Colombo provoked the Sri Lankan president to suggest that promoters be whipped. While they get their act together, there’s another sector that should consider seeking out the best geopolitical risk consultants who are still on the market: the tech sector.

Unlike traditional consumers of political risk insight such oil & gas or mining firms, technology firms rarely operate out of restive provinces in rural areas, nor do most of them have long supply chains to protect. Many of them, such as Twitter, for example, which doesn’t produce any hardware, and Facebook, are safely based in California, which might be part of the Old Wild West, but is hardly dangerous now. Others, including IBM and Apple, which produce a variety of hardware, are exposed to a variety of political risks, including volatile currency fluctuations, vulnerable supply chains, dependence on the availability of natural resources, the etc. Yet Apple too is based out of California, and therefore feels far removed from the places we think of when we mention “political risk.” Apple and Google, like all public firms, must file a 10-K form with the SEC, specifying potential risks to its business and investors. I’ve read hundreds of these forms and I can tell you that they reveal a lack of understanding of the intricacies of political risk, including both macro and micro political risks within their home countries, as well as geopolitical (transnational/cross-border) risks.

The tech sector’s belief that it is insulated from most types of political risk is an illusion, and a dangerous one at that. The origin story of the tech industry is a beautiful fairy tale and it’s hard to blame the sector- it’s full of optimistic idealists who are eager to use technology to solve complex problems, transcend national boundaries, and empower individuals. These all sound like great goals, but there are many deeply entrenched power structures that like their problems complicated, their borders well ringed with barbed wire and their populations well-controlled.

By perpetuating its own illusion, the industry makes itself more vulnerable. And we’ve seen the results. The tech industry continues to be repeatedly burned by a variety of political and geopolitical risks. Of course there’s the obvious example- Edward Snowden’s revelations regarding the extent to which US tech firms’ user data was compromised by National Security Agency surveillance. But there are others, such as operating in countries where cyber attacks to steal intellectual property are unrelenting. Then there are issues like the locations where companies decide to build their data centers; those choices have massive ramifications in terms of legal and regulatory compliance issues. Or situations where tech firms are having trouble balancing the desire to protect users’ freedom while contending with censorship demands in countries like Turkey (where Twitter is going to court) or China (which Google chose to leave over censorship concerns). Or how protectionist policies designed to ensure the sustainability of fledgling but primitive domestic firms is keeping tech firms like Uber from capitalizing on underserved markets. And how tech firms seeking to “disrupt” dysfunctional or outdated practices with tech innovations risk disrupting existing balances of power in countries where such actions can result in swift backlash. When I first heard news of Netflix’s major global expansion, my first thought was to wonder how they’ll deal with undependable connectivity in some areas, or censorship demands, and how long it’ll be before there’s a scandal of some sort. Finally, of course, there’s the issue of due diligence, which done poorly can topple a firm. The political risks involved in the movie business are quite well known, yet just like with the rockstars, the same issues pop up regularly due to poor planning.

Following the disclosure of various NSA spying programs, as well as data regarding tech firms’ frequent acquiescence to demands that user data be provided to the NSA, many foreign clients decided to stop using services from firms based in the US. Snowden’s disclosures caused the trifecta of losses: monetary, legal, and reputational damage. IBM lost a considerable amount of business in China, Google is the target of European ministers seeking to punish the firm via new laws and legal challenges, and Microsoftis contending with the ramifications of a PR scandal regarding its particularly close relationship with the NSA, which caused many consumers to seek alternatives to Microsoft services such as Skype. The exposure of NSA surveillance alone is estimated to cost just the cloud computing industry alone between $22 billion and $35 billion in overseas business in the 3 years between 2013 and 2016.

In that case, the tech sector willingly collaborated with the government, providing access to services and sensitive user data, in exchange for what it believed was the government’s ironclad guarantee that the collaboration would remain a secret. The government seemed like a helping hand reaching down into the Valley. As we all know, valleys aren’t a good place to be in battle, and the government doesn’t have the best reputation for protecting secrets. (Yes, I’m talking about you, NSA, CIA and OPM.) But the bottom line here is that there was no perceived cost for the tech sector to cooperate with the government, and therefore no perceived risk. A sure thing is rare in Silicon Valley, and this was the closest you could get to a sure thing. Now, the costs are not only clear, but prevailing. The tech industry lost the trust of its users, its foreign clients, and even some of its own employees with each consecutive expose, and it’s still trying to regain it, through legal challenges to requests for data, enhanced encryption (which makes it impossible for companies like Apple to read or share the contents of Messages sent between Apple devices with the government), and a myriad of PR efforts designed to convince the public that they will protect privacy and resist surveillance efforts. But the damage has been done, and dozens of new competitors, promising to protect user info and encrypt communications are capitalizing on the fall out, creating new competition, and more hurdles for tech firms fighting to retain and increase their market shares.

Given the rocky relationship between tech and the government, it’s surprising that the White House continues to call for Silicon Valley and tech leaders in general to do more to help the government fight transnational threats such as the Islamic State terror group. Sure, it seems logical that the tech sector could help the US prosecute its war against the brutal organization, given heavy IS use of Twitter, YouTube, and other platforms to spread its graphic and horrific propaganda. But while both the White House and tech firms share a desire to defeat the group in theory, the means by which the White House wants tech firms to fight the group are no longer cost or risk-free. In fact, they’re priceless. And while the White House is looking to score political victories, tech firms are looking to score legal victories that in many cases will make it harder for authorities to do their jobs. Tech firms aren’t trying to subvert the war against IS just to be difficult; they realize that winning one battle could mean losing their war to stay alive.

Not a single tech leader is willing to enthusiastically and unequivocally help the government install backdoors, or supports some government officials’ absolutely ludicrous calls to outlaw encryption. Not only is outlawing encryption completely impossible, any efforts to try reveal the governments’ embarrassing inability to understand how technology works. This was on full display recently, when Silicon Valley showed up to fight with the government over a plan to implement 2013 revisions to the Wassenaar Agreement, which would in effect keep tech firms from creating secure software. And the battle will only get harder for the government now that the tech sector is more self-aware. (There’s an artificial intelligence joke somewhere here, but I’ll leave it to you all.)

Tech firms have learned their lesson in the case of Silicon Valley vs. government surveillance, and they won’t risk being burned so easily again. But on other issues, where the tech sector hasn’t been burned nearly as badly, they’re still floundering as political risks build up around them. While it’s great to include the worst-case scenarios on their 10-K disclosures or in all hands meetings, while dismissing them as unlikely, it’s frequently the not-even-close-to-worst case situations that will cause the biggest problems for these firms. We often plan for the really big problems we can think of, and overlook the minor ones that be the one domino that start the chain reaction that could lead to a company’s bankruptcy or collapse. To avoid getting burned again, and from multiple risks, increased investment in political and geopolitical risk insight will be vital. A good political risk consultant isn’t going to predict the future. Their job is to anticipate the turbulent waters ahead, and to ensure that companies safely navigate any obstacles ahead, while also making sure they don’t sabotage themselves by failing to think through the consequences of their actions- especially the ones that seem like sure things. Every system needs an occasional patch to keep functioning, and when it comes to political risk, Silicon Valley needs a critical update.

The Geopolitical Risk Consultant and the Nervous Tourist

10 practical tips for staying safe if a security situation deteriorates

In the aftermath of the attacks in Paris on the night of Friday, November 13th, I’ve heard from people who are nervous about undertaking planned travel to Europe and other destinations where terrorist attacks recently occurred. Apprehension about travel is understandable, especially since several attacks throughout 2015 have targeted areas popular with tourists, such as the popular beach town of Sousse in Tunisia, the Central Railway station in Ankara, and the often sold out Bataclan concert hall in Paris. Although most people’s trips will be safe and fun experiences, it’s always best to be prepared and ready to deal with an emergency situation if it arises.

Although I’m a geopolitical risk consultant, and mainly work with businesses and organizations operating abroad, I also frequently prepare travelers for their business and personal trips by providing them with briefings or mini-simulations with easy to follow tips for how to react during any type of emergency. I’ll skip the tips about how to avoid becoming the victim of petty crime, like never sharing your itinerary with strangers, and stick to the basics of being prepared and responding to a deteriorating security situation. These are the broadly applicable and useful tips for any travel, regardless of purpose or destination:

1. Register your travel with the State Department or other applicable government entity and memorize the phone number of your embassy or consulate closest to your destination. If you register your travel and provide contact information, which can be easily done online, you help to ensure that the State Department (or other government entity) can communicate with you in the event that citizens need to be notified of emergency information or informed of evacuation procedures. Make sure you actually memorize the number of your embassy or consulate, since saving it in your phone will not help if your phone gets left behind or broken during an emergency.
2. Buy travel insurance. In the event that something happens in your planned destination before you leave, you’ll be able to postpone or cancel travel, without losing money. It’s also a good idea to carry travel medical insurance that covers medical evacuation, especially if you have a medical condition. Without such insurance, you could be left with massive medical bills.
3. Always be aware of your surroundings. This doesn’t mean that you need to obsessively scan the crowds around you while ignoring your activity. However, this does require that you regularly check your surroundings. Do not walk around with all your attention on the phone screen in front of you. Similarly, do not walk around with a big map that blocks your view and automatically identifies you as a tourist. Look at a map of your destination before you leave and learn the positions of easily identifiable landmarks to help you navigate. This requires some preparation before you leave, including learning the basics of the organization of streets at your destination. For example, in Washington D.C., numbered streets (10th, 11th, 12th) run north to south, while lettered streets (D, E, F) run east to west. Just this simple realization can help you navigate better without a map. While you’re at it, check for information about areas that are best avoided, or places that are safe during the day but considered dangerous at night.
4. Memorize emergency numbers for ambulances, police, and fire services. In the event of an emergency of any kind, you want to be able to quickly reach the relevant first responders. In most areas, such authorities will speak English, but confirm this in advance, and learn a few phrases in the official language at your destination, so that you to communicate the nature of your emergency and provide details. If you have a medical condition or severe allergies to latex and/or certain medications, carry this information on a card in your wallet, or wear a medical alert bracelet while you’re abroad. First responders will check for such documentation before administering aid.
5. Always know two exits out of a building. Wherever you go, make sure that you know of a second way to leave a building, if the main entrance is blocked or inaccessible. That means taking a look at one of those ubiquitous fire safety maps that are posted in many places. Yes, it takes a moment, but it could save your life. As you walk through a museum, mall, convention hall or hotel, keep an eye out for exit signs in the applicable language; for example, “sortie” in French, “salida” in Spanish and “ausgang” in German.
6. Keep passports, extra cash and any crucial information on your person. It’s annoying to carry a money belt or second wallet stuffed into your pants pocket, but you should never keep your passport or all your cash in a purse or backpack while abroad. Always keep the passport and a second stash of cash on your person, since you may be separated from your purse or backpack in an emergency situation. You never want to be caught without any identification or sufficient money for a cab ride back to your hotel. It’s also a good idea to keep a small map with your passport and extra cash.
7. Do you best to blend in. Repeatedly, we’ve heard stories of hostages being identified as foreigners and targeted by terrorists. Keep your jewelry understated. Avoid wearing clothing that reveals where you’re from, such as college sweatshirts, baseball caps, or overly patriotic attire. Refrain from wearing graphic t-shirts with symbols that could be considered inappropriate or rude. Avoid drawing attention to yourself by keeping conversations quiet and private.
8. Avoid traveling during periods of increased tensions, such as following a major natural disaster, during elections or major strikes, or while mass protests are ongoing. Although it’s perfectly safe to travel in the US during the election period, since transitions of power in the US are peaceful, this may not be the case in countries where elections are often accompanied by violence, mass demonstrations, or military coups. Know the political situation at your destination. It’s a good idea to postpone travel if you have any concerns about your ability to reach your destination or remain safe while there. If you are already at your destination when mass protests or instances of violence occur, remain at your hotel, contact your embassy or consulate, and make a plan for leaving the city or country.
9. If something happens- above all, remain calm, seek shelter and notify family of your status. This is not easy to do, as many people can tell you from experience. Try to breathe evenly and and analyze your options for getting away from a deteriorating situation. Your first goal is to make sure you are safe. This often means sheltering in place, unless you are in a building that is under attack. If you are on the street when something happens, enter the nearest hotel, shop or office building and stay clear of the door and windows. Do not remain on the streets. Once you are safe, use your phone to call the emergency number if you are injured and need medical attention. If not, refrain from calling, since first responders will be overwhelmed with calls. Contact family members to tell them you are safe, and notify the State Department. In most instances, you will be told to shelter in place until the incident is over.
10. In the aftermath, assess the overall security situation and make plans to return home. Once the situation is resolved, find your way back to your hotel and stay in touch with your embassy or consulate. If the situation is successfully resolved, continue your trip and leave as planned. If the security situation appears to be further deteriorating, or if additional attacks or outbreaks of violence take place, make a plan to leave as soon as it is possible to do so safely. In the event that borders or air space are closed, shelter in place until such restrictions are lifted, and/or take a train or other means of transport to the nearest bordering country to fly home from there.

I hope these will be helpful to anyone who is apprehensive about traveling in the immediate aftermath of the Paris attacks. If you have a more specific question, feel free to get in touch. 

The Geopolitical Risk Consultant and the First Date

Imagine you’re about to go on a first date. You usually have a routine. You met at an event or via a friend. After the first meeting, you skim their social media profiles for clues. You text one another for a few days, trying to impress the other person with your wit. Finally, you set a day and time to go on that first date. You take your date to the same classy restaurant as the last five people you took out on dates, then go out to that one “special” place for dessert or a drink. You think you make them feel special, but you hardly ever go on a second date. Why? Because the strategy is bad. Anyone who dates successfully will tell you that you should tailor the dates to the person you’re courting, not try to get every person you date to enjoy your “classic” and uninspired plan. Seems pretty simple, right?

Lots of people will keep trying and failing, but they’ll always assume they haven’t found the right person, not that the problem is their bad first date strategy. This issue is especially prevalent in the business world. Rather than tailoring a strategy to the market a company is trying to enter, the company tries to use the same “proven” strategy for every market entry plan. But just as every date is different, so is every country, region, and city. What works in one could be ineffective, or even illegal, in another. Stricter cultural norms, widely derided symbols, etc., could make a market entry campaign crash and burn. But instead of seeking the advice of a good geopolitical risk consultant, many businesses will keep trying and failing. The unique characteristics of various markets, at the local, state, and national levels, as well as the transnational level constitute both opportunities and risks. Talented geopolitical risk consultants, who possess the knowledge to help businesses (whether they produce heavy machinery, drill for oil, or try to sell music) navigate that complicated landscape. Without the insight that geopolitical risk consultants can provide, many businesses will keep making costly errors.

This is why Uber keeps having trouble abroad. And why many bands’ concerts in China get cancelled. And why supermodels that don’t understand the significance of politically charged hand gestures keep getting in trouble. All of these mistakes hurt bottom lines, reputations, and future prospects. Yet many people still don’t understand why having a geopolitical risk consultant is vital. They figure that a good tax specialist, a famous attorney and a swanky PR firm constitute the requisite triumvirate for solving any problem. All of those are important for solving problems, true. But a geopolitical risk consultant can help you avoid the problems, instead of just lending another hand in cleaning up the mess. This is why I’m writing a book- to explain what geopolitical risk consulting is, why it’s important, and what we can do to help it meet its potential. I’m having great conversations with people interested in the field, and those who have great stories to share about their experiences with geopolitical risk. If you have a tale to share, please get in touch!

Before I go, a piece of first date advice: always have a list of interesting questions in mind in case the conversation hits a bump. The three questions you can always count on to revive it: 1) What did you want to be as a kid? 2) Are you Team Summer or Team Winter, and why? 3) What’s your most flattering Instagram filter? (Just kidding with that last one. Instead, ask which historical figure they’d most love to take a selfie with and why.)

How to Fight - and Win - the Two-Front War Facing the Political Risk Industry

The response to my last article, “Political Risk: An Industry Facing Wars on Two Fronts,” was overwhelming. I heard from long-time veterans of the industry, professionals who left the field out of frustration, young analysts on the front lines, and students worried that they chose a career in a dying field. I think I responded to everyone (if I didn’t, try re-sending) and assured many of you that you shouldn’t lose hope. As promised, after identifying the problems, it’s time for me to offer solutions and reasons to be optimistic.

The Analyst Front

To win the internal war facing the industry, political risk firms need to invest in their analysts. It sounds easy enough, but many firms will make poor investments, like suggesting team building exercises and picnics. These firms will lose the war. Make no mistake about it. This war will have casualties- many bad political risk firms will fall. Consolidation within the industry will be unavoidable. But with the right investments, some companies- willing to confront the industry’s problems- will emerge victorious. There are several things that companies can start to do right now- not in 6 months or a year, after the best analysts have given up and left. Please don’t respond by telling me people are too busy to incorporate these. I know you’re always busy, but let’s be honest- there are down times, and if people just stop procrastinating/leaving work super early/scheduling unnecessary time-wasting meetings, time can be found.

The right investments that political risk firms must make are the following:

1. Create opportunities for analysts to continue learning. This is crucial. Analysts come in with a wide variety of skills. Some took advanced economics classes, and some don’t understand the difference between real and nominal GDP. It’s vital that analysts close any knowledge gaps in their first year on the job, whether via peer-to-peer teaching (teaming new analysts up with advanced analysts so junior analysts can learn from their colleagues) or by taking classes. Many great courses are available online free of charge — check EdX, Coursera, Udacity, etc. — so this does not have to cost the company anything more than a couple hours of the analysts’ time per week, or if done outside of work hours, could count towards progress for promotion. In my opinion, as someone who has taken online classes and done peer-to-peer teaching, the latter is more effective and allows the senior analysts to see the junior analysts’ progress, but if it simply isn’t feasible, courses are better than nothing. The initial focus should be on crucial skills and knowledge such as economics, history, and languages, but analysts should keep learning as they progress, learning as much as they can about infrastructure, new technologies, emerging markets, etc. I would recommend staying away from the numerous “political risk modules” offered by organizations in DC.
2. Use micro-simulations to train analysts. Micro-simulations are short, easy to create/administer exercises designed to train new hires, help analysts practice responding to fast moving breaking developments, prepare to monitor a major international event, incorporate new technologies, or troubleshoot new protocols, to see what is and isn’t working. These interactive experiences are far more effective than hiring someone to come talk at your analysts for 4 hours. They’ll absorb very little. A company can purchase micro-simulations from a simulation designer, for a relatively small fee, or write them internally if someone within the firm has the expertise. It’s possible to administer these micro-simulations during an two-hour period. Sacrifice one boring and unproductive weekly meetings for these experiences once a month and watch the analysts turn into a better functioning team. Don’t wait for things to go wrong during a truly critical moment for clients. This is why first responders simulate responses. Having a list of steps to take in the event of a disaster is great, if you know those are the right steps and will actually deliver the results you need, having seen the steps in action during a simulated crisis situation, and modified them accordingly.
3. Facilitate opportunities for analysts to gain first hand experiences in their region or industry of expertise. Yes, this costs money. And yet, a “mining expert” who has never been to a mining site, but read a few mining websites, should be trusted just as much as a “surgeon” who read a couple of good surgery books but has never performed surgery. It’s simply dishonest. If your company claims to have expertise in a field, but analysts are just Googling, clients will quickly be able to tell. Remember that clients are right there in the mines, or right there in the middle of a city experiencing fast-paced changes, and the two articles an analyst read to produce “analysis” will not have the nuance and details necessary to advise clients how to mitigate specific risks or seize fleeting opportunities. That is, after all, how we got here and why there’s a second front in the war- that of clients pushing back against bad analysis and considering bringing their political risk in-house. Therefore, companies need to look for ways to send their analysts abroad or to industry sites immediately- not next year. Combine such trips with participation in conferences or industry events, where a company can almost immediately recoup some of the cost by engaging in marketing efforts or having analysts drum up new business. Of course, the larger payoff will be in justifiably charging higher fees for better analytical products. A trip to Greece may cost about $5000, but a typical report costs $5000+, and is usually resold multiple times. If your company can’t afford this investment, because you’re paying to much for developers to make a flashy website or tricking out your office, it’s likely that you’re already only one battle from losing the war. Clients who actually need good information, and aren’t just ticking a compliance box, don’t actually care how pretty your office looks. They care whether they’re paying you for good information.

The Client Front

To win the external war- the one waged by clients realizing that they’re paying for sub-par intelligence and analysis, there are also a few immediate steps that firms can take.

1. Bring the sales team and the analyst teams into a room together and acquaint the two teams with each other’s processes. The number one source of problems between clients and analysts is that sales teams, which do most of the business development, do not know or understand the limitations of analyst capabilities- mostly because they’ve never interacted! Sales personnel over-promise, and the analysts are left in a bind where they can only under-deliver, which reflects badly on the sales team if disappointed clients leave, perpetuating a vicious cycle where two critical parts of a company undermine each other. If sales staff know exactly what the analysts can and cannot do, they can craft better pitches and avoid the problem of setting up analysts for failure. If the analysts understand the sales process, they can suggest ways to frame business development proposals in a way that plays to their strengths, while the analysts are busy gaining the knowledge/skills/experience outlined in steps 1–3 above. Then, armed with new capabilities, analysts can help develop new products that the sales team can offer to clients. By being in tighter cohesion with one another, these teams can start working towards attracting interesting work and retaining great clients, instead of working against one another.
2. Have analysts on all calls with clients. Analysts need to hear client requests straight from clients, not have to go digging through email chains to decipher a client’s questions. This carries a high risk of failure, because the analyst may misinterpret the question, waste weeks or months working on the wrong answer, angering the client, wasting resources, etc. Yes, this happens. By having analysts on calls with clients, analysts can ask clients for details immediately, clarify any uncertainties and walk away with a better understanding of the question they’re meant to answer. If a company doesn’t trust analysts to be on calls with clients, that’s a clear warning sign of big internal problems.
3. Find clients whose needs companies are already able to satisfy. Some of you may have read my earlier article, Why Rockstars Need Geopolitical Risk Consultants. Many people replied to say they had never considered that musicians and artists could benefit from political risk insight. There are many similar underserved markets. For example, smaller startups that can’t afford the traditional suite of products offered by political risk firms. However, many of the bigger firms with strong capabilities in limited regions, but not all regions, are better suited towards serving the needs of these startups, which have a presence in just a few countries. While the other analytical teams build up expertise, the stronger analysts can attract and retain such non-traditional clients, who require more limited support. As these smaller clients grow or require more support, the political risk firms’ analysts can meet their increasing needs, and charge commensurately higher fees. Political risk firms ignore smaller or non-traditional clients to their own detriment.

There are additional things firms can do, but many of these cannot be immediately incorporated. They’ll be included in the book that I’m writing on the industry, so keep an eye out for that.

As we see from the news every day, the world is not becoming any simpler to navigate. Clients operating in complex business and security environments will continue to need the right intelligence and analysis to safeguard personnel, property and investments. Political risk as an industry has a role to play in that process, but only if it can demonstrate its usefulness. By following these recommendations, political risk firms can make progress towards that goal, and score victories on both fronts. Yes, all of these recommendations take investment, including time, money and commitment. They require buy-in by analysts, who are much more likely to do better work when they see their superiors investing in analytical capabilities and offering opportunities for advancement. Those who ignore these recommendations may instead consider investing in a white flag.

Political Risk Analysis: An Industry Fighting Wars on Two Fronts

As many of you know, I’m currently writing a book on the tradecraft of political risk analysis. I use the word tradecraft not because I’m suggesting that political risk analysis involves the same type of cloak and dagger tactics of espionage, but because I believe the best analysis is done by analysts who complement their research with experience in the field, talking to locals, surveying environments first-hand, and constantly accumulating new experiences, not just sitting at a desk. Political risk analysis is not just summarizing information found on the Internet; it is the result of research, discussions with experts, on the ground experiences and advanced analysis, involving not just raw data, but also a good deal of creativity. 

My draft thus far does not paint the political risk industry — by which I mean firms from which other companies purchase political risk analyses — in a flattering light. In fact, the state of the industry appears to be quite tenuous, and it’s no secret. When I had the chance to speak briefly with Nassim Taleb at the Fletcher Conference on Managing Political Risk at Tufts University in March, and told him that I’m a geopolitical risk consultant, he gave me the sort of sad smile that I imagine people reserved for proud typewriter repairmen circa 1998. At best, most people now see political risk firms as glorified research services with poor track records, and at worst as dens of snake oil salesmen, promising far more than they could ever deliver.

It seems everyone who’s paying any attention knows that the political risk industry is mired in battles that it is by no means guaranteed to win. The reality is that thousands of companies are paying massive sums of money to political risk firms that claim such advanced proprietary analytical techniques as literature majors sitting at a desk Googling all day long. That’s what a business is missing, clearly- a Pushkin expert dissecting the details of complex international sanctions related to financial transactions. The bigger problem is, not every question can be found by Googling, but that’s all most analysts ever do.

Until recently, the political risk industry was only fighting a war on one front- clients finally realizing that they’re paying for mediocre intelligence. Clients are increasingly pushing back on the bad products they’re receiving. They know the potential that the industry has in helping them navigate complex security and business environments, but these firms are not only falling short of their potential, they’re casting doubt on the industry’s value. In addition, with the infusion of inquisitive millennials into their workforces, all of whom expected to find fulfilling, intellectually satisfying careers, but are increasingly ending up disappointed, these political risk firms are facing an internal battle. The political risk industry is now facing a two front war- one from without, waged by dissatisfied clients, and one from within- waged by disappointed analysts.

The political risk industry emerged when businesses seeking to expand abroad realized they were facing a complicated world full of tremendous risks and enormous opportunities. Back then, in the 1980s, those individuals who spoke languages, travelled widely and accumulated vast professional networks were in demand, for the rich insights they could provide. These people had accumulated years of travel experience and sector or political expertise by serving in governments or international organizations, as researchers, practitioners or engineers in lucrative industries such as oil and gas, mining, etc. When they joined political risk practices, they brought their experience with them, and these firms didn’t have to invest very much time or resources in their professional development. Clients generally got good information, allowing them to seize lucrative opportunities, while sidestepping major risks, because the analysts writing their products were experienced, not because they were good at library research.

This was all well and good before the Internet, when specialized information was hard to obtain, and well worth buying from specialized firms. Now, it’s harder for political risk firms to pretend that they hold a monopoly on private intelligence. So to stay relevant, many lobbied for regulations such as “duty of care” and other compliance rules that make it necessary for clients to seek the services of political risk firms. But if they want to be invaluable, if they want to be indispensable, they have to do a good job. But these firms aren’t meeting high standards, largely because of the war they’re fighting internally, against cadres of disappointed analysts who realize that these firms aren’t interested in doing a good job- they just want to make a profit by doing the minimum.

Nowadays, those with significant expertise aren’t staying at political risk firms any longer than necessary to gain some experience and clout. Others, not based in major political risk centers like D.C., NYC and London, face hurdles to entering the industry. Many don’t see the point in joining what they believe to be a doomed industry. Increasingly, they’re starting their own one-man/woman consulting shops- and many aren’t succeeding because it’s hard to be a one-man global expert, especially if they lack the connections to find paying clients. Sadly, anyone with substantial experience sees bigger firms as a stepping stone to their own firm out of necessity, rather than desire. Once they realize that promises of doing “compelling work for interesting clients” means sitting at a desk and Googling all day long, without the expected travel, first-hard experiences or intellectual satisfaction, they believe that they have to go it alone to do things the right way. These companies simply aren’t willing to invest in helping their own analysts hone true analytical skills or expand their first-hand knowledge of locations or industries.

For the most part, the bigger political risk firms are now staffed with recent grads who have little experience, but happen to speak an in-demand language. As a colleague recently told me, most of these firms won’t even consider someone unless they’re fluent in the right language- even if that candidate has years of real experience in politics or in international organizations. Stunningly, a literature major who speaks fluent French is more valuable than someone who worked to draft legislation at the EU. (Interestingly, some now charge upwards of USD 400 per hour for access to grad students doing research on topics of interests to political risk firms’ clients. That’s one way to fund a dream of being a professional student, I suppose.) And not only do these firms hire mediocre or inexperienced analysts, but they avoid investing much time and resources in developing these analysts’ skills, short of a few training sessions here and there. Some analysts stay because they want to get paid. But the best ones, having realized that there is no clear career progression or future for them, decide to move on. A major firm experienced what one person with knowledge of the situation called “an exodus,” having grown tired of the president’s use of analysts as a way to prop up a personal media profile. So clients end up with even worse products, because political risk firms are left with weak analysts, some of whom are focused on making sure their boss sounds good on TV, rather than working on the complex questions that businesses need answered.

As a result, some firms have concluded that political risk will never meet its potential. Many, especially smaller firms for whom major retainers are cost prohibitive, are now seeking bargain analysis. If the products are going to be useless, they reason, why pay more than necessary for them? As long as they can tick the boxes on their compliance checklists, even bad analysis- which no one will read anyway- will suffice. For someone like me, committed to intellectual honesty, that’s hard to swallow. Those who truly need the insights that political risk analysis can offer are looking inward- bringing the capability in-house instead of paying for retainers with the bigger political risk firms. But maintaining an in-house function quickly becomes expensive.

Apparently some people are now realizing that the ways things are being done in the political risk industry actually doesn’t make much sense. And the evidence is in the numbers. The balance sheets of some of the big names that come to mind when you think of “political risk firms” are barely breaking even, or firmly in the red. Some of their financial statements are readily available on the Internet. So now what? Now that the industry is waging a war on two fronts, how does it escape collapse?

I’ve written previously about what we can do to improve the caliber of analysts, but none of the solutions are easy fixes. Millennials are certainly trying to innovate the industry, trying to cut out the bureaucracy and use technology to streamline the process, turning static reports into ever-evolving wikis, creating dynamic simulations or interactive workshops. But companies launched by millennials are facing the same problem most do when they decide to take matters into their own hands- they’re learning that they can’t simply bypass the issues the industry is facing with enthusiasm and a splashy website. Many of the problems that the industry is facing outside of the two front war are major obstacles. These include lack of awareness of the industry among the very firms most likely to benefit from it, and the problems of convincing C-suites to take a gamble on a new provider rather than simply sticking with a long time provider.

If it continues to ignore clients’ complaints and analysts’ grievances, the industry is doomed to fail, because it will simply become a race to the bottom- which companies can do the bare minimum at the lowest price. If that happens, the political risk industry will truly never meet its potential. It’s not like a specialized surgeon who’s the only one qualified to do surgery, and therefore can’t be cast aside.

Political risk is becoming increasingly accessible to the layman, especially laymen who have experience in industries that are highly exposed to political risk, and who can figure out what information to look for and how to analyze it. Like people who realized they didn’t need the Pope to communicate with G-d, clients will realize they can bypass the big political risk firms and simply hire the consultants they need just when they need them. Perhaps the best resolution to the political risk industry’s two front war lies in listening to the ideas of their dissatisfied analysts, and using those as new methods to win back their clients’ trust. It’ll take time and resources, but the political risk industry can either take the risk and revolutionize itself, or be defeated.

Why Rockstars Need Geopolitical Risk Consultants

Over the last week or so, I’ve come across several articles involving rockstars and pop-stars experiencing issues that could have easily been avoided if only they had a geopolitical risk consultant on staff. I know most people don’t think there’s any crossover between the work of geopolitical risk consultants and celebrities, but once you understand, it’s stunningly clear- every celebrity should have one to help them avoid problems and take advantage of opportunities. Let’s take each of the cases and analyze how a geopolitical risk consultant would have helped.

The first story I saw last week involved Maroon 5, a band with a global fan base, currently on their “V” world tour. The band’s much anticipated China tour dates in September 2015 were abruptly cancelled last week. Speculation regarding the cause ultimately settled on a tweet posted by group member Jesse Carmichael, wishing the Dalai Lama, Tibet's controversial spiritual leader, a happy birthday. The tweet has since been removed. Any geopolitical risk consultant worth their fees should have told the band that the Chinese government would view any examples of public support for the Dalai Lama negatively. And a great geopolitical risk consultant would have briefed Maroon 5 on controversial topics well in advance of their tour, not after the fact. It’s not as though support for the Dalai Lama has never affected a band before. There are plenty of bands that faced the ire of the Chinese government over support for the Dalai Lama, continued their public support, and accepted the fact that they’d never tour China. But they know the costs. In this case, two cancelled concerts in Shanghai and Beijing constitute a financial and reputational loss for the band, its organizer Live Nation, and the fans who eagerly anticipated seeing Maroon 5 play. Is it Maroon 5's fault they aren’t experts on geopolitical intricacies? No, but making sure they had someone who could acquaint them with the relevant facts is definitely a requirement that any global band and brand should explore. We’ve seen tweets ruin careers. We’ve seen tweets move markets. Is it any surprise that tweets affect the level of geopolitical risk that global rockstars face?

Yet another case is that of Taylor Swift, who just announced a foray into the Chinese market via a fashion line launched in conjunction with her “1989” world tour. Unsurprisingly, the gear will feature her initials, “TS,” and the year “1989,” her year of birth. Now, who can tell me why that’s a geopolitically sensitive issue? Ding ding ding! Yes, the Tiananmen Square (TS) massacre took place in 1989! Now, clearly this is a coincidence, since those are her real initials and her real year of birth. But there are no coincidences in geopolitics. Especially not when it comes to issues as politically charged as the incident in Tiananmen Square. Again, a good geopolitical risk consultant would have raised this issue while reviewing the design concept, and not after plenty of the gear had been made. The point I’m making here is not that a geopolitical risk consultant would have urged her to consider every geopolitical issue before choosing a name for an album or a world tour. The point is that these pop-stars should not be caught off guard by these issues after the fact. If she were adamant, then at least the likely costs and other factors would have been understood and accepted in advance. Steps could’ve been taken to mitigate the problems, etc. A geopolitical risk consultant won’t guarantee that you won’t ever lose money, but they will make sure you know that the loss is likely in advance, so that should you continue on your course, he or she can help you mitigate the damage.

Finally we have the case of Chris Brown, who’s stuck in the Philippines because of an ongoing contractual dispute involving his failure to return an advance fee paid to him to play a New Years concert that he ultimately skipped. A geopolitical risk consultant would have reviewed the policies for the enforcement of contracts in the Philippines and warned him not to travel to a country that enforces disputes by barring people from leaving until a dispute is resolved. Therefore, he could’ve ensured that his legal team either negotiated a resolution prior to his arrival, or he could’ve skipped traveling there for now. This rule barring departure exists in several countries, and officials don’t care if the person they’re detaining has a Grammy. Now, he’s stuck in a country, has missed a scheduled performance in Hong Kong, and looks a bit foolish for not thinking before landing. The machinations involved in seeking a clearance to leave will be a much bigger hassle than those involved in resolving the issue beforehand.

Celebrities- do yourselves a favor. Hire a geopolitical risk consultant. Will they help you avoid every problem? No. But they’ll certainly make sure you know what you’re getting into when you take a geopolitically controversial public stance, or wade into geopolitically charged waters or forget that your Grammy awards don’t let you fly as high as a passport does. That way, you can decide if the benefits outweigh the costs, and minimize the fallout likely to affect your fan base, your bottom line and your brand.

Myths vs. Realities: The Geopolitical Risk Consultant and the Tourist

There was a time, not so long ago, when tourists could convince themselves that an inexpensive trip to a unstable country would be safe, as long as they stayed at the resort. It was a myth most people in the geopolitical risk consulting world never believed. That myth was resoundingly shattered for everyone else on Friday, when terrorists attacked a beach resort in Sousse, Tunisia, killing at least 39 people, and injuring 36 more, mostly foreign tourists from the UK and Ireland. This wasn't the first time Sousse had been a target; in October 2013, a suicide bomber targeted a hotel in the popular resort town. That attack wasn't as serious. Only the suicide bomber died, after guards spotted him and chased him off, leading him to detonate his explosives on an empty beach. Perhaps that made people feel more confident that resort visitors were safe in Sousse, since the guards basically did their job. And so tourists continued to came back, keeping Tunisia's massive tourism industry alive despite ongoing violence in parts of that country, and the knowledge that the resort town had been targeted already. In the wake of Friday's attack, of course, hundreds have canceled their planned trips. Some suggest that Friday's attack may spell disaster for the vital tourism industry in Tunisia. I think enough uninformed people exist to keep it alive, but I doubt it'll thrive in the short term. 

Tourists have a way of convincing themselves that if they practice sound personal safety tips, and remain aware of their surroundings, they will be safe. And for most people, on most trips, that's true. But as people start to travel to the most remote parts of the world, or to more unstable ones, personal safety tips like wearing a money belt or not wearing flashy jewelry simply aren't enough to ensure a safe trip. Given my professional role as an independent consultant, I've counseled friends for years on whether their exotic destination was a good choice, and how to be prepared if something should go wrong. As they've watched the news unfold, they've called me increasingly more frequently, and I've been glad to see them taking the dangers more seriously. Do some still go to dangerous places? Yes. But I'm more confident that they're better informed and able to handle a crisis. But what about those people who don't have a geopolitical risk consultant on speed dial?  

While doing some research for a personal trip, I was recently amazed to find that leaders in the travel industry, like TripAdvisor and Hipmunk, do not have sections on geopolitical risk factors affecting travelers. I suppose it's an occupational benefit, and not a hazard, that I automatically analyze the geopolitical situation in a destination country. But for the average traveler,  TripAdvisor will tell you about the "sleep quality" of your hotel, but rarely if the hotel has excellent security or a good safety record. They do however mention if a travel warning is in place for a destination, though most people won't be able to tell much from the standard boilerplate warning text. Hipmunk will help you rank your travel options by "agony" involved, but not by how safe the airport is, or whether the hotel is located in an oft-targeted area. It seems so obvious to me, if these are hoping to be one-stop destinations for travelers planning trips, that safety and security would be major factors in travelers' decision making processes. If you're listening, TripAdvisor and Hipmunk, I've got some advice for you- hire a few geopolitical risk consultants and make sure your users are truly informed when researching travel. 

Many people still believe that geopolitical risk analysis is only for business travelers, looking to open new markets and close major deals. But the reality is that geopolitical risk analysis entirely customizable to the needs of every sort of traveler. A contested election that sparks violence, a major service strike that suspends flights, a natural disaster that strains a country's weak power grid, or a banking crisis that results in empty ATMs will affect businesses and tourists alike. What would you do without wifi or in the event of a shuttered airport? Would you have enough cash on hand to buy the bare necessities? Would you know how to get out of a country or how to contact people who could help? How would you be able to get in touch with family? These are questions that any tourist should be able to answer confidently. 

It's true that most countries that rely on tourism have a serious interest in keeping their resorts open and safe even as violence rages elsewhere. Look at Mexico, or Egypt. But just because they have that interest doesn't mean that they'll be able to keep tourists safe if terrorists are determined to target those areas.

It's time to stop pretending that resorts are perfectly safe oases of delicious food, endless drinks and clear water. For terror groups (which unlike petty thieves do not rely on the presence of tourists for the purposes of making money) resorts are the perfect places to target the most foreigners and grab the world's attention. And as soft targets- that is those without the multi-layer security features of government buildings or military bases- they'll continue to prove relatively easy to hit.  

As tourist season heats up, call your local trusted geopolitical risk consultant and ask for an overview of the political and security environment in your destination country before you book a trip. It's never bad to have more information and be better prepared should something happen. And the best part is that once you learn what to look for, analyzing geopolitical risks for your destinations will quickly become an automatic part of your vacation planning process, helping you feel more confident that you know what awaits you at your destination and making you feel better equipped to handle any situation that may arise. 

From Myths to Realities to Progress: How to Improve the Quality of Analysts in the Private Intel/Political Risk Industries

I’ve spent many weeks identifying the myths prevalent in the field of private intelligence and political risk (many of which the industry has actively perpetuated) and the realities of working in these fields over the last 5 years. Although I haven’t covered all of the myths yet, I do think it’s time for a more optimistic post, one that focuses on how to improve the political risk industry. Not surprisingly, I’d like to start with the people- the analysts and consultants and project managers who make political risk firms function. We can only fix many of the industry’s issues by hiring, training and enabling the right people. We’re failing miserably at this. First, we need to correctly identify the skills necessary to excel in the field. Only then can we find people with skills to match those needs. Obviously, there are a few basic skills: research skills, analytical skills, oral and written communication skills, familiarity with the Microsoft Office Suite, as well as the ability to collaborate, multi-task and work in fast paced environment, while paying attention to detail. This probably sounds like countless job postings you’ve seen in just about any industry, and that’s exactly the problem.

Step 1: Write better job descriptions, and know what skills are truly needed.

Private intelligence and political risk are not just like any other industry, and they require a very particular set of skills. Ideally, they’re polymaths, or at least philomaths. In addition to all of the skills mentioned above, intelligence analysts and political risk consultants need to possess curiosity, know how to ask the right questions (and have the persistence to find the right answer), have a vibrant imagination, and be able to absorb, comprehend, analyze and apply vast amounts of information very quickly. This includes being able to read maps, remember the names of leaders, understand statistics and be familiar with a wide spectrum of cultures, as well as having a nuanced understanding of business processes and how they are affected by political risks. Good analysts and consultants have to be able to think several steps ahead, to see connections, causes and consequences of events.

Step 2: Establish more effective interview processes.

Right now, the hiring process in the fields of private intel and political risk basically consists of a couple rounds of interviews where candidates are asked basic questions (What’s your greatest strength? Biggest weakness?) and a writing test, and occasionally case study analysis. I don’t really care if someone’s biggest weakness is that they have trouble saying “no” to people. I can teach them to prioritize tasks and feel empowered to tell managers when they’re overloaded with work. I can’t teach people to be naturally inquisitive or very creative. I want to see someone define political and geopolitical risk, and to give a short presentation with analysis of a recent international development. I want to watch them think on their feet as they tell me why it’s important, whom it’ll affect and 3 scenarios for where things can go in the future. I want to hear their ideas for how a fictional client could navigate the situation to minimize disruptions to their business. I want to know what products they would offer the fictional client to keep them from running into the same problem or keep them better informed of their risk environment. Not only would such a trial by fire tell me whether the candidate possesses all the skills I value, but it would also weed out lots of candidates who seem good on paper, but would likely be disappointing analysts and consultants. I don’t want to watch them flounder for three months, when a 15-minute presentation and a conversation can minimize the torture and lost time for both parties.

Step 3: Stop hiring typical candidates and expand the pool of possible candidates by targeting smart people early. The types of people being hired by these firms can generally be grouped into 4 categories:

1)   People who’ve spent 3 months to 3 years at a government agency. Why? Their alphabet soup government agency experience lends credence to analytical teams. “We have analysts who’ve spent time in the FBI/CIA/DIA! We must know what we’re doing.” The problem? These people didn't spend enough time there to really become immersed and succeed in their position, since they left, likely signifying that they weren’t good enough to get promoted. Or, they spent long enough there to get burned out because they were so frustrated with bureaucracy and now just want a position where they can coast and “re-charge.” Neither makes for a stellar analyst. They also lack business expertise. 

2)   People who’ve previously worked at a think tank. Why? These people know how to research and write but they’re used to spending months doing research and writing dense reports, not quick turn two-pagers outlining the major threats to shipping firms in Asia. They usually have good networks- that are full of other think tankers. There’s nothing wrong with these people at first blush, but they often lack any business experience and therefore could explain the finer points of the Yemen conflict but couldn’t tell you why it affects a firm’s supply chain. I’d prefer someone who worked in a small logistics company, who likely got to understand the finer workings of business, over someone who’s only ever done research and never experienced how a business functions.

3)   People with a Masters degree and no real world experience. Why? A Masters degree is quickly becoming a pre-requisite for any decent paying job in political risk. As someone who went from undergrad straight to Georgetown’s SFS, I heartily endorse getting that MA ASAP, but only if you're sure of your path and have decent professional experience from your time in college. I worked in business, public relations, on campaigns, etc., throughout my time in undergrad, building an international network of contacts. Those who get a Masters degree with virtually no experience beyond a couple think tank internships are unlikely to have a vibrant network. When you’re being vetted by a private intel or political risk firm, the strength of your network becomes one of your biggest assets.

4)   People who are straight out of undergrad and speak a language. Why? They speak a language! I love eager students straight out of undergrad. They’re usually energetic, curious, and good with technology. Most often, they’re hired because they studied a necessary language. The problem is that taking 4 years of a language makes a person a good walking interactive dictionary, but not necessarily a good analyst. I can always find someone in my network to translate something for me. What I usually need is someone who also knows the culture, particularly the business culture, of the country where that language is spoken.  This leads me to my next step.

Step 4: Do a better job of marketing the industry as a good career option.

Study abroad programs are increasingly popular and students are going abroad to a range of fascinating countries where they have the potential to strengthen language skills, learn a new culture and see the world from a different perspective. The industry needs to start getting on the radar of sophomores, who are choosing majors and planning their junior year experiences, and letting them know the private intelligence and political risk are great career paths. By reaching them early, we can help students better focus their study abroad programs to suit their strengths, take advantage of all that the experience has to offer, including interning in a foreign firm, and equip them with the foresight to know which knowledge and insight firms will value in candidates. If we can convince these students to engage in international affairs in addition to international cocktail parties, we can have shape a new generation of analysts who make the most of their time abroad and come back with knowledge, perspectives and a level of comfort being abroad that could greatly boost the value of our analytical teams.

Step 5: Institute interactive training programs.

Ah, orientation. The weeklong torture, I mean, "training process," usually includes boring, endless lectures directed at the recently hired cohort. They throw in everything from security and sign-in procedures to how to access files to how to fill out templates and even follow style guides. We’ve all been to classes where it makes sense when the teacher says it, but we get into trouble when doing it on our own. Why must we lock these poor shmucks, I mean analysts, into windowless rooms and drone on about dozens of things that they likely won’t absorb? Training should be an interactive process, not a passive listening experience. We should have them try to use the online platform, go to a mock client meeting or interview with a subject matter expert, design and deliver a mock presentation or draft a mock project. We need to give them feedback and point out oversights, and let them try again and watch them improve. We need to give these people an active role in their training. Yes, this takes time and effort, but the results are always better because they’re actually training to do something, running into obstacles and learning ways to address them while adopting company procedures. 

Of course, instituting these steps will only yield good results if a company is well managed and provides analysts with adequate work to challenge them and allow them to grow. A bad firm won't find any magic fixes in implementing these steps. Now that we’ve covered how to make sure we have the right people to do good analysis, I’ll discuss the ways in which we can improve our methodologies in the next post. 

Myths vs. Realities: Insights from the Fletcher School’s Managing Political Risk Conference

I had the opportunity to attend the Fletcher School of Law and Diplomacy’s Managing Political Risk Conference in Boston, MA, on Saturday, and wanted to share a few of my insights this week.  The conference provided an interesting window into the myths that the industry perpetuates- some of which I’ve covered in past posts (just scroll down). Those who are interested in reading my live-tweets of the event can search my Twitter feed, @MilenaRodban, using the hashtag #MPR2015.

The day-long conference consisted of panels on (R)evolutions in Political Risk Assessment; Investment and Operations in Complex Environments, and The Shifting Geopolitics of Oil and Gas. In each of the panels, there was some measure of sweeping and misleading generalizations, such as assertions that we now have “ubiquity of data” (wrong- we lack a great deal of information about some of the most intriguing places that we analyze, such as North Korea). This is one myth that the sector has a vested interest in perpetuating, given clients’ increasing desire to incorporate “big data analytics” into the products they order. Of course, you can only analyze data if there is data to analyze, and many firms claim to have proprietary methodologies for doing so. But not only do we lack a good deal of data, but we also lack the means to apply meaningful quantitative analytical techniques that can produce any useful results, if there are even any results to be found. Still others advocated for the need to institute certification procedures, because anyone can claim to do political risk now. The problem with that is that certification usually breeds standardization of thought, which we certainly don’t need in the field. What we need to methodological rigor, to adapt better analytical techniques to help our clients understand how we arrive at our conclusions.   

There were also some great insights, such as a spin on an old quote by Ezra Solomon: “the only function of political risk is to make astrology look respectable.” Indeed, as those of you who follow my Twitter feed know, I often call out bad analysis based on absolutely outlandish attempts at “gaming” the future. I was surprised and happy to hear multiple admissions that a great deal of bad work is being done in the political risk sector, with clients having no way to truly judge the quality of work since it often goes only to a single client, and is never judged in public. The emphasis on risk, without equal emphasis on opportunity, was also criticized, as was the fact that most clients who pay for political risk analysis are not educated enough or capable of acting on the information they receive, and there hasn’t been much effort expended on correcting this.

Generally, the panels were optimistic about the field, and the opportunities and challenges available to those who choose to enter it. But in private conversations, many lamented the fact that though the field has done a good job of identifying the issues that need to be fixed, there are few ideas to be found for how to fix them. My biggest issue with the conference was that it was the equivalent of preaching to the choir- panels where the panelists told the attendees things we already knew. As I told a couple of the organizers, an idea for next year would be to have an interactive workshop with some consumers of political risk analysis, to get a better idea of how they view the field, what problems they see and how we could do a better job, as an industry, to address their needs.

Here’s the thing we all need to understand- the number of political risk firms really exploded in the wake of the global financial crisis of 2007-2008. Before the crisis, when money was plentiful and cheap, businesses could gamble on risky bets and write off losses without a problem. But after the crisis, when money was suddenly scarce, businesses became much more risk averse, and unwilling to take big gambles. They turned to a multitude of political risk firms for help in deciding which gambles weren’t too risky to pursue. Back then, it was easier to say “don’t go there” and be taken at one’s word, and make a good deal of money without trying too hard. But now, as money is becoming plentiful and cheap once again, the appetite for risk increasing, and the most attractive investments are in dangerous places- avoiding them isn’t an option. Yet political risk firms haven’t used their profits to invest in more advanced capabilities, and they can’t do much to meet the more complex current needs of many clients. That’s why so many political risk firms are now jumping on the big data bandwagon- it’s easier to write code to analyze “data” than build extensive local networks of contacts or open a host of global offices. Which is why, after a couple of sessions on the need to add methodological rigor, using a combination of qualitative and quantitative techniques, the mood of the conference suddenly changed during the keynote.

The keynote address featured Dr. Nassim Nicholas Taleb, author of the INCERTO masterwork, which includes The Black Swan, The Bed of Procrustes, Fooled by Randomness and Antifragile. Mr. Taleb’s lecture was without a doubt the liveliest of all, which should not surprise anyone who has ever heard him speak.  Mr. Taleb is well known for his skepticism regarding the very idea that risk, and specifically black swan events, can be predicted, and he was dismissive of the idea that big data analytics could predict much of anything. After all, he argued, there were trillions of data points available before the global financial crisis, but no one was able to predict that. His dismissal of statistical analysis was not shared by some in the audience, who were eager to extol the merits of the work being done with data, but Mr. Taleb effectively ended that discussion with his explanation of the turkey problem. Relying on past data is similar to having a turkey, fed for 1,000 days straight, with each day confirming to the turkey that it is well-loved by its owner. That is, of course, until a few days before Thanksgiving, when the turkey’s life suddenly ends. All the past data could have never predicted that final day for the turkey. Could the turkey come back to life, he'd wonder how he'd missed it, but of course, he's dead, and no amount of better monitoring or forecasting would have done him any good. It's natural, when something goes wrong, to wonder if we didn't do enough of something, but what we should really wonder is if we were doing the right thing to begin with. Mr. Taleb was similarly dismissive of using models for forecasting. As he said, when we have a model, we look only for the data that the model requires to work, and don’t really look closely at a situation, often missing important clues. If you’re lost in a city, he said, an economist you encounter along your wanderings will say, I don’t have a map for this city, but I have one for another (similar to applying a model for one type of situation to another, which may not have the same characteristics). You’re better off having no map, and looking around for clues to help you find your way, than having a useless map. The keynote ended to thunderous applause by the younger attendees, and pursed lips among those practitioners of political risk who strongly disagreed with Mr. Taleb’s assertions.

After the keynote, I spoke to several attendees from a variety of fields. Many of them were obviously unhappy with the points Mr. Taleb made, accusing him of being an entertainer, whose ideas barely hold up upon close review. The problem is, of course, that many current methodologies in political risk similarly don’t hold up under close examination, and by dismissing Mr. Taleb’s arguments, we’re not doing the field of political risk any favors.

This is, of course, why I’m not at all interested in predicting the future- check back next week for my take on where political risk can go from here, if we’re brave enough to try something different.  

Myths vs. Realities: How I "Do Risk"

I often hear from students and young professionals that their career goal is to "do risk." Some of you may laugh, while others may lament that it's similar to those who want to "make policy." They sort of know what it means, but they couldn't tell you about a day in the life of someone who "makes policy." Many students and emerging professionals are starting to learn about the field of risk consulting and are unsurprisingly drawn to the excitement of a field where one is never bored, and where one's skills, languages abilities, and insights are applied to interesting problems that sometimes require travel to exotic locales. To some extent, it's true- no two of my days are ever the same, and I'm constantly learning new things and solving complex challenges. But what does it mean to "do risk?" Until you've spent a day in the field, and I do mean the field, and not just in an office, it's hard to imagine a day in the life of a geopolitical risk consultant. Here's how I "do risk," and I don't claim it's representative of a typical career in risk consulting, but I do hope it provides some insights to those who are considering a career in the field. For those who are consumers of political risk, the lesson is- never trust a political risk consultant who just stays in their office all day long. 

Morning: A typical day starts with catching up on news from Asia and Europe over a cup of strong coffee. I read as much as possible, in all the languages I speak, to get as broad a picture of overnight developments as possible. I try to identify potential flash points: where there might be a major holiday that's likely to spark protests or business disruptions, which government is likely to announce a big policy initiative or what industry might be facing a big challenge due to logistical issues in a shipping hub. For this, I use a multitude of news apps (my favorite being Circa), as well as Twitter, LinkedIn, and Facebook news feeds. I've tried the aggregator news apps, but I find they either overload you with info, or miss important things. I try to read government statements too. Even though I might know they're essentially meaningless or that you have to read between the lines to understand the true meaning, those who come to me with questions might be intrigued by such proclamations and lack the expertise to interpret them. 

Next comes a review of email. I know it's a little obsessive, but I read every single email and promptly delete anything irrelevant. I don't know how or why people can be fine with having thousands of unread messages in their inbox. I respond to anything that requires a response, and then move on to my projects for the day. 

Usually, the project I'm working on requires me to speak with a couple of subject matter experts or local contacts. I prefer to meet with people in person, since it helps build rapport, but given vast distances, I'm usually limited to Skype and phone calls. I always have a list of questions prepared to help guide the conversation and make sure I acquire all the information I need. When a student calls me to chat about the field, I can always tell when they haven't prepared any questions, and I wonder if they hang up and realize they've neglected to ask something important. 

Every hour, I check in with Twitter and the news apps so see what's changing and any new stories that may spark questions. Is the situation in Yemen really evolving or is this newest attack more of the same? Are protests in Brazils likely to die down or will they keep growing and affect ports or industrial hubs? Is an upcoming election in Nigeria likely to be delayed again due to the fight against Boko Haram? I look at the news through the eyes of a CEO, forced to make decisions about expanding operations, evacuating employees or delaying a major investment based on something that may be a flash in the pan, but also could be a sign of a quickly deteriorating security situation. Many of these questions need to be answered quickly, so keeping an eyes on the major stories allows me to analyze developments in real time, instead of having to catch up under a tight deadline. It takes some time to learn how to decide what's important, but once you've answered a couple hundred questions, you start to see that themes emerging- what businesses consider political risks and what's just noise. 

Lunch: Over lunch, I may have a meeting with someone I've met at a networking event. I'm always eager to learn about people's experiences, so I'll have lunch with someone who's just returned from abroad and can offer some local insights into developments that just can't be absorbed via other means, or I'll speak to someone in a field that could benefit from political risk analysis to explain why they might want to consider incorporating it into their decision-making process. Often I learn something new about how someone outside the political risk field views what I do, which leads me to believe the field is failing miserably at managing its own public relations image, but that's a topic for another post. 

Afternoon: After lunch, I tend to focus on research and writing. A motivational playlist is an absolute requirement for this, as is muting my phone's notifications settings. I'll have a screen with news on mute in the background, just in case something significant happens, but otherwise, I try to concentrate on doing my research and drafting good analyses. This often requires some good detective skills. My research might be about something very specific, or very general. For example, if I need to forecast whether a country is likely to buy a certain weapons system or institute a new far-reaching law, I work backwards, researching the circumstances of the last few major sales or announcements of new laws to see if I can identify any clues that I can then look for in the current situation. 

Sometimes word comes in that there's a new focus for a project, or an added element, or a last minute request. It requires flexibility to shift focus and adapt to changes in projects, but it's the nature of the industry that decisions suddenly have to be made or projects are abandoned or modified as the market shifts. This is frustrating for many new entrants to the field, who like to take some time to really dig into a project, only to find it cancelled after a great deal of work has been done. There are good ways to minimize the chances of this if you have sound protocols for determining whether a project is worthwhile from the start, but generally, it's important to learn to go with the flow. 

Evening: In the evenings, there's usually a networking event, a lecture, or a cultural event. There's always something going on in DC, but it takes some trial and error to learn which events are worth attending. Cultural events tend to draw people with great stories, while lectures draw lots of fanboys and fangirls eager to hear an impressive personality rehash the argument from their latest book.  Lately, my favorite ones are the events hosted by The Project for the Study of the 21st Century, where, full disclosure, I'm also a Global Fellow. The Project's goal is to spark interesting conversations, and that's certainly happening. I usually go out for drinks with a group of attendees after these events to discuss what we've learned, what we agree or disagree with and how it translates to our work, whether in the private sector, in government, or at non-profits. These conversations are always thought-provoking, as long as it's with a diverse group. We almost never agree on a single interpretation, but we have fun trying to persuade one another, and it's always useful to see the world through the eyes of people in different fields. A good geopolitical risk consultant needs to be articulate and know when to talk, but it's equally important to know how to listen and observe, since it helps you learn to interpret developments from other viewpoints. 

Some evenings are dedicated to responding to requests from journalists who want my insights on a news story. It's great to see some elements of the media slowly start to appreciate the political risk field and the insights it can contribute to helping people understand the significance of breaking developments. Generally, though, the media isn't very interested in deep analyses, and I sometimes have to make sure my analysis fits in a short quote or sound byte. A general rule to remember is that by the time something is being reported on TV, a good political risk consultant should have already warned a client about the emerging situation and crafted an analysis that will help them take action. Once something is on TV, it's usually too late for a business to take any proactive measures. If a business is hearing about something for the first time on TV, they should probably consider a better political risk firm. Reactive responses are costly- far more costly than the monthly retainer for a political risk firm. Take the recent attack at the Bardo Museum in Tunis. Cruise lines with good political risk firms would have been aware that terrorists are eager to target foreigners in Tunisia, and been in a position to take measures to protect their passengers or avoid certain ports while the threat level was high. 

At the end of the day, I typically make a few notes... names of people to follow up with, what topics came up in conversations, upcoming events that may be of interest. And then I get ready to recharge and tackle the next day's challenges, always in a pair of stilettos.

Questions? Comments? Let me know...  

Myths vs. Realities: Job-hunting in Political Risk

Every month, I get messages from emerging private intelligence and political risk professionals asking for recommendations on the best ways to break into the industry. Each time, I’ve recommended a few of the same basic strategies for landing a job in the field. I’ve decided to combine them into a post on myths vs. realities of job-hunting in this field, which I hope will be helpful to many readers. If you have more specific questions, feel free to send me an email: milenarodban(at)gmail(dot)com or get in touch via Twitter: @MilenaRodban.

-       Myth: All openings in political risk include those words in the title.

Reality:  Jobs in the private intelligence and political risk fields are rarely called what you would expect. Such positions could be referred to as “sovereign risk analyst,” “credit analyst,” “intelligence analyst,” “threat analyst” and “media analyst,” or simply “researcher.” You’ll search in vain for a “political risk analyst” on the company’s website, but if you speak to their “global threat analyst,” you’ll find they’re basically engaged in political risk analysis. The name a company chooses to use can tell you something about how they see the role, and the extent to which they do (or don’t) understand the field, its capabilities and its responsibilities.

-       Myth: Basically, all you need are skills in research, writing and languages.

Reality: The skills necessary for successfully working in the fields of private intelligence and political risk are numerous, and some are easier than others to express on a resume. Having excellent communication skills or language skills is easy to articulate, but what about the other major traits vital to being a good political risk analyst? Good judgment, excellent research skills, a vibrant imagination, initiative, persistence, resilience, flexibility in pivoting between multiple projects, and knowing how to ask the right question. These are harder to express, but that’s why you have to write a cover; it conveys what your resume does not. Cover letters are difficult to write, especially when the interviewer or job poster does not even know what they’re looking for in a successful candidate. But this is where research comes in handy. 

-       Myth: Political risk doesn’t involve math, so you don’t have to worry about understanding quantitative methodologies or statistical analysis.

Reality: Sorry, readers. There is plenty of math involved in the field. From being able to understand statistics and how to compare them- I once had to explain to a colleague why you couldn’t just compare GDP and GDP per capita figures, when the person found GDP per capita for one country and not another- but you also have to comprehend the methodology by which the statistics are calculated. Similarly, the field involves lots of work with risk matrices, charts, graphs, and all manner of calculations. Quantitative methods are increasingly being incorporated into political risk, and it’s important to have those skills going in, since it’s hard to learn the finer points of data analysis on a three-hour deadline. Make sure to highlight your quant skills on your resume! 

-       Myth: You can get all the experience you need by interning at think tanks, private intelligence firms, or political risk firms.

Reality: One of the most common questions I get is how someone can improve their resume. Employers like to see that you’ve made an effort to pursue the knowledge that will help them address client needs. There are a few clearly valuable skills: languages, knowledge of economics/finance, and tech skills (Excel, Adobe Publisher, CMS, web design). Less obvious is the fact that employers want people with broader business expertise. Employers value knowledge of how real-world businesses operate, both where they’re headquartered and abroad. This can only be acquired through diverse work experience, and not just two think tank internships. Pursue travel experiences and gain familiarity with how business is conducted abroad. You can also get it by working at a small business where you do a bit of everything- logistics, billing, sales, etc.

Employers also value candidates with sector expertise. You can only really get that by working in the particular industries which often retain the services of political risk firms, such as oil & gas, manufacturing, shipping, banking, etc. If you’re not sure about which sector you want to choose or don’t have a particular preference, research what sort of clients your dream firms have, and accumulate expertise in those sectors where they have the most clients. Don’t focus on a field where they have only one client- if they lose that contract, they may not need that expertise for a while.

-       Myth: When you’re desperate for a job, you can skip the step of researching a firm’s reputation.

Reality: Always do your research about companies to which you’re sending applications. I often get messages asking what I know about a particular firm, but these questions mostly arrive after someone has applied. Do your research before you hit “submit.” Before you write a cover letter, you should carefully research the company/think tank/government office. DC is small, and people generally know and have opinions about each other’s work. Know ahead of time if the place you’re applying to is generally well respected or routinely criticized. Does it take some time and effort? Yes. Will it make your application stronger if you demonstrate you’ve done your research? Definitely. Will it keep you from accepting a position that could affect the rest of your career? Quite possibly. 

-       Myth: Most people land jobs by sending in online applications.

Reality: Most people find job in political risk by becoming very good at networking. Many people don’t make effective use of their personal and professional networks. When a job opens, existing employees know about it first. They know what skills are necessary for succeeding in the newly available position, and when they think of whom to recommend, make sure it’s you. Don’t do this by pestering your connections. You want to show, not tell. Engage in productive debates, share interesting articles, express your analytical viewpoint on certain developments. Get them to realize you’re smart, talented and insightful. This takes time. It isn’t easy. It requires initiative, imagination, persistence, flexibility and resilience. But those are exactly the skills you need to succeed in this field, so start practicing! 

I hope this is helpful for those of you just starting your career or currently searching for positions in the field. Good luck! 

Myths vs. Realities: Suggested Solutions for Companies Looking for Private Intel/Geopolitical Risk Support

In previous posts, I’ve outlined some of the myths that are prevalent in the field of geopolitical risk analysis. Many of these myths grew out of a fundamental misunderstanding of what geopolitical risk is, who is exposed to it, who can mitigate it, and why it matters when making decisions. Now comes the hard part- solving some of the problems and improving the value that geopolitical risk consultants can provide to clients. 

I’ve heard from many readers who’ve shared feedback about their experiences interacting with geopolitical risk and private intelligence firms. Most of the complaints can be grouped into several key issues. Many of you mentioned high volumes of irrelevant information, which provide little value and that many people simply don’t even have the time or desire to read. Others explained that geopolitical risk consultants provided only very high-level information that did not include details applicable to client needs. Finally, some of you mentioned that internal teams tasked with providing support aren’t adequately trained to fulfill their mission. In this post, I’m going to offer a couple of solutions for companies looking for more effective private intel/geopolitical risk support. If you’re interested in applying them to your business, I’m always happy to consult.  

#1: On-Demand Consultants

We’re all familiar with the concept of video on demand; and consulting on demand works much the same way. If a company doesn’t need constant monitoring and analysis, a cost-effective option is to find an experienced geopolitical risk consultant who can provide bespoke analysis only when it’s needed. I’ve had several clients who’ve benefitted from this type of relationship, because it lets a company’s leadership learn what type of support is needed, desired or unnecessary, without committing to an expensive retainer or binding contract. This is particularly useful for smaller companies that are exploring different possibilities or considering expansion, and don’t already have ongoing exposure to high levels of risk. Once such firms have identified what is and isn’t valuable, or exposure to risk increases, they can move on to another option.  

#2: Combination of subscription and an internal Global Threat Analyst

Some companies may benefit from a subscription to an intelligence service that provides daily or overnight briefs with international developments, along with an internal employee designated as a global threat analyst. This person’s mission is to monitor how those developments may or may not affect their operations. For example, an overnight brief may alert the analyst to an imminent strike in a port, which the analyst can then examine to see if it may affect the company’s operations. Or, after hearing about an earthquake in a particular city, the analyst can determine if the resulting damage may affect a company representative’s ability to meet with government officials. This is ideal for smaller firms with sporadic exposure to risk, or ongoing exposure in one sector.   

#3: Internal Private Intelligence/Geopolitical Risk Teams

For many clients, particularly smaller companies or startups with operations in several countries, an internal private intelligence and geopolitical risk team may be the most useful, and likely most cost effective, option. By having an experienced geopolitical risk consultant provide the training, a company can quickly develop a two or three person team to monitor, analyze and synthesize targeted intelligence. A company can have this team focus on just the countries, regions or industries that matter, potentially identifying and mitigating risks or exploiting opportunities much faster than via an outsourced capability. This is the best option for firms with limited exposure in just a few countries and a need for ongoing monitoring of certain categories of risk in those areas.

For those of you who need to outsource your capabilities for a variety of reasons, stay tuned for future posts, where I’ll help you identify the capabilities you should look for, how to interpret the jargon you’ll hear, and how to build a constructive relationship with a geopolitical risk firm that will avoid some of the pitfalls I’ve covered in previous posts. If you’re interested in learning more about the ideas outlined above, send me an email: milenarodban(at)gmail(dot)com. 

Myths Vs. Realities: The Client-Analyst Relationship... It Takes Two to Tango

This is the latest in a series of posts on myths vs. realities in the world of private intelligence and geopolitical risk. If you're new to the site, you may want to start with the Glossary. To see previous posts in this series, simply scroll down on this page. 

Based on some of your feedback to the last post, I want to address some of the myths surrounding the client-analyst relationship. It’s often taken for granted that a client has a direct line to an analyst, and can reach them at any time for an answer to a complex question. This is very rarely the case. The client-analyst relationship is often far less smooth, yet as I’ve mentioned previously, a client posing a question to an analyst is what sets the private intel cycle in motion. The nature of the client-analyst relationship can help predict just how smoothly the cycle will unfold.

Once an analyst receives the question, they employ a specific methodology to provide the answer. An answer can only be as good as the question, so it takes two to tango. Much of the time, bad questions lead to bad answers, and tense relationships. Unfortunately, in most cases, clients aren’t leading the tango, and analysts have to try to step in to direct, often stepping on toes as they try to navigate the tense line between needing more information to respond to a client’s needs while not wanting to nag. There are several reasons why the client-analyst relationship is often dysfunctional:  

Clients don’t know how to ask questions

In general, the more robust and detailed the question, the more complex the methodology, and the richer the answer. The more challenging a request, the more sources an analyst will use, the more experts they’ll reach out to, and the more detailed an answer they’ll produce. Conversely, the more general or simple the question, the weaker the methodology, and the more unsatisfying the answer. An analyst won’t work as hard to answer a basic question, especially when he or she already suspects the answer, and clients rarely ask how the answer is derived. There no question here that a client will receive an answer that’s only as good as the question he or she asked. Unfortunately, many clients don’t know how to ask the right question, or how to pose their request in the best way to ensure that they’ll receive a useful answer. 

Which question is likely to lead to a useful answer: What’s happening in Yemen? Or… How will the ongoing political upheaval and complex security environment in Yemen affect port operations in Aden? An analyst can answer the first question with a paragraph, but that paragraph’s worth of information is very unlikely to help a client determine whether his operations are threatened or what steps might be prudential in avoiding disruptions or mitigating threats to staff and cargo. The second, question, however, is more likely to lead to a robust answer, including a general overview of the situation in Yemen, as well as specific information that will inform a client’s decisions regarding how to protect operations, build a relationship with a new governing authority, safeguard personnel and institute protocols designed to minimize losses.  But to ask the right question, a client needs to know what information they need, which is driven by the purpose the intelligence will serve. That brings us to... 

Clients don’t always want thorough analysis- just confirmation

In some cases, clients simply aren’t interested in getting thorough answers, because they’ve already made up their minds and they simply want their decisions validated (I touched on this in the post on bias). These clients are typically the type who see geopolitical risk as having little value, and therefore don’t integrate geopolitical risk analysis into their organic decision making process. To them, it’s an afterthought at best, and a compliance necessity at worst. In such cases, clients simply want to check a box that says they sought another opinion, largely for the purposes of mitigating liability. In other cases, a client doesn't understand the many purposes of intelligence or geopolitical risk analysis, and asks basic questions because that's all they believe such a firm can answer.

Similarly, if the analyst isn't sure about the purpose her analysis will serve, she will err on the side of caution. If an analyst feels that a question is asked simply to obtain confirmation, there is less of an impetus to introduce information that could criticize a client’s decision, since an answer that upsets the client may lead them to end the relationship with the intel/risk firm. This is detrimental to both the client, who may be making a very big - and avoidable - mistake, and the analyst, who violates tenets of intellectual honesty to tell the client what they want to hear.

Sales/Marketing staffs as a third wheel

Salespeople, who seek out clients and connect them with analysts, drive most new business. Few analysts go out and establish new business relationships. So analysts, who are best positioned to speak to their capabilities and skills, aren’t the ones speaking to clients about their needs. Instead, a salesperson may pitch a client exploring overseas expansion on a product that will help them decide which new market to enter. Unfortunately, sales people are not well versed in intelligence, geopolitics or even business operations in a particular sector, and don’t know exactly what information they need to ask for to pass to the analyst. Similarly, the sales people also don’t know whether an analyst is fluent in the language of the country to which the client is considering an expansion, or whether the analyst has a good local source network there to help them gather the information needed to answer the client’s question. As the intermediary, who often turns into an awkward third wheel, the sales person typically turns the communications between client and analyst into a game of telephone. Much of the meaning gets lost, and the intermediary gets in the way of a productive relationship, as a sales person seeks to wrap up billable projects, rather than provide maximum value to the client.

Analysts often need to seek clarification, and if they fear bothering a salesperson to do so, or don’t trust a salesperson to get the right information, they’ve more likely to complete a project without the necessary information, resulting in a product that’s all but useless. A bad experience can lead a client to stop using the firm. On the other hand, a knowledgeable salesperson (who knows how to introduce the client to the analyst and then let them develop a relationship) can do wonders, leading to a productive relationship between an analyst. Once they’ve established a rapport with a client, an analyst can better anticipate needs, save their clients money and become an invaluable part of the decision making process.

If clients are serious about deriving value from intelligence and geopolitical risk analysis, then they should understand that they are buying access to methodology and a relationship with an analyst, not an answer to a question in the form of a PDF. By being an equal partner in the tango, they can ensure that they know the right questions to ask, understand the analyst's strengths/weaknesses, and have a good idea of the methodology used to obtain information.

Now that we’ve covered the major myths, check back next Tuesday for the first in a series of posts with ideas for fixing some of these problems, improving the industry and boosting its value to clients. 

Myths vs. Realities: Bias and Groupthink in Private Intel/Geopolitical Risk

This is the third part in the Myths vs. Realities series. If you’re new to the site, you may want to start with the Glossary. To catch up on previous posts in this series, scroll down- they’re all on this page.  

In the previous two parts, I’ve examined some similarities and differences between the US Intelligence Community and the way that private intelligence firms or geopolitical risk firms function. The issues of bias and groupthink are prevalent in both- I don’t claim that the IC is any better at combatting both problems effectively. However, despite wider flexibility in hiring practices, the problems of bias and groupthink are even more acute in private intel firms. The following are five types of bias/groupthink that I’ve observed during my five years in this field:

Selection-driven Groupthink

For the IC, the security clearance process can substantially limit the pool of applicants that it can consider, necessarily eliminating citizens of other nations, US citizens with extensive time overseas, naturalized US citizens with certain backgrounds, etc., etc. This is a security issue, and a reality that the IC cannot change. In the private sector, however, there is significantly greater flexibility in terms of the types of people who can be hired. Some of the very backgrounds that may prevent an individual from obtaining a security clearance in the IC could in fact provide invaluable expertise at a private firm. This includes close familiarity with other cultures, native language expertise, and wide ranging business connections or personal contacts. And yet, most private intel firms are full of analysts from the same few top tier universities, with the same think tanks internships, generic study abroad experiences, and basket of intermediate language skills. These people had many of the same professors, read the same books, and wrote the same types of theses. They all got together at the university bar to bemoan becoming jaded cynics who are never surprised by anything. Now they read the same websites and books, and fantasize about the same PhD programs, while secretly hoping they’ll one day be Secretary of State. I don't mean to suggest that there's anything wrong with top tier university graduates who become analysts, but when a company tends to hire from the same three schools, they shouldn't be surprised that over time, groupthink becomes a major issue. 

It’s no wonder then that these very similar people think the same way, and arrive at the same conclusions, and confirm each other’s analytical assessments (on the rare occasions when they bother to discuss them). Diversity among analysts is always good, but it’s also not a magical solution. Even a diverse group could produce uninspired analysis if a single analyst - who never engages with others to debate hypotheses, explore possibilities or consider alternative perspectives- writes projects. And in fact, most projects are the result of an analyst working solo, thereby exacerbating this groupthink issue, and leading to the next two types of bias, which are inextricably linked. One leads to the other, and both stem from the lack of a division of labor between collection and analysis.

Collection Bias

As I mentioned previously, the IC divides collectors and analysts into two separate groups, and the skills needed to excel in each job vary greatly. In most private intel firms, the same person typically collects and analyzes the information, interviews subject matter experts, fact checks their own research, and writes the assessment. That’s a lot for one person, and reminds me of Charleston Tucker’s improbable character on State of Affairs. She runs covert ops, shoots people, breaks people out of custody, oh and by the way, puts together the Presidential Daily Brief and actually briefs the President. When someone is a one-man private intel firm, they can’t possibly execute every single function well.

The quality of the analysis is determined then not just by the analyst’s analytical prowess, but also by the quality of their research skills. Usually, an analyst confirms a piece of information in two other sources at most, rarely checking to see if the two sources are truly different, and deems the information correct. For some things, two sources are enough, but for others, two sources are inadequate, and could significantly skew the analytical conclusion. Given short deadlines, the analyst will typically only look for just enough information needed to make their assessment, and does not do extra work to confirm, challenge their own preconceived notions, or consider the implications of whether a certain piece of information is driven by an agenda and therefore inaccurate or useless for making decisions.

Confirmation Bias

When the information is weak, the intelligence derived from it is weak. When we simply try to confirm our preconceived notions, that’s not good analysis.  Lots of us look at the world through a set of lenses that we developed during our college and graduate school years. Some of us are realists, others liberals or constructivists. Those paradigms help us interpret the world we see around us, because we prioritize certain elements of connections, dynamics and conflicts over others. These lenses lead us to certain suspicions or theories about what explains international developments and how to interpret pieces of new information. Our specialties also affect our analyses. With regards to the recent drop in oil prices, some saw the Saudis using OPEC as an offensive weapon to hurt Russia, Iran (and Syria), while others suspected that the Saudis were taking a defensive posture, to protect an already eroded market share as US shale production increases. Both can be true. Both may be true. But if an analyst’s first thought is that Saudi Arabia is gaining power in the region, they may only search for information to confirm that suspicion, and ignore the market share question, which may in fact be the greater of the two motivations, or of greater interest to a client. If the analyst is also the collector, they’re casting a much narrower net for information. If the functions were split, a collector would cast a wide net, and get as much information as possible, to pass on to the analyst to reconcile the disparate facts, forcing the analyst to consider many competing explanations for what may be happening.

I should note here, that clients are part of the problem in this particular type of bias. Many already have a preconceived notion that they’re trying to confirm because they’ve already made plans to take a certain action and they want to reassure themselves that they’re right to do so.  

One of my biggest frustrations is that geopolitical risk analysis is not truly a part of clients’ decision-making process. It’s frequently an afterthought. If it were part of the organic decision-making process, geopolitical risk analysis would be used before a decision is made, not to rubberstamp existing plans. To put this in simple terms: If you want to buy a laptop, you first read a variety online reviews from respected tech sites, then go to the store to check out the top contenders, and then comparison shop online to find the best price or buy the best laptop at the store. The way geopolitical risk analysis is used now, is akin to first ordering the laptop you think is best online, then going to read enough online reviews - of only that particular laptop - to convince yourself you made the right choice. Seems a bit backwards, right? 

Caution-driven Bias

This is one type of bias that’s very difficult to counteract. In the industry, there’s a legal consideration at play. Private intel firms never want to put a client in harm’s way or expose them to risky situations. Hence, analysis will always err on the side of caution. This frequently makes identifying and mitigating risks a little easier. But then again, it also doesn’t take much expertise to warn someone not to go wondering around at night. It also certainly gets in the way or identifying and exploiting opportunities, all of which involve some degree of risk. It’s easy and logical to tell someone that they should stay in their well guarded, five star hotel. But if they need to go out to a building site, or visit a well-trafficked area, it takes a greater degree of security expertise to determine what is and isn’t safe, and what specific precautions may be necessary. Analyst X, fresh out of undergrad, likely doesn’t have that expertise, and so they’ll just give a generic set of common sense recommendations. Is that worth the money being charged for them? And if the people writing the recommendations aren’t trained to make good ones, why should those recommended be trusted?

Template-driven Bias

Finally, we come to template driven bias. Most products created by private intel and geopolitical risk firms are based on templates that follow a standardized outline. This creates consistency across products and ensures that analysts include a comprehensive overview of the subject they’re analyzing. Mostly, though, templates allow products to scale- swap out a couple details, and the product can be resold. The motivation here is profit, not intellectual rigor. In theory, this is great. Every product in a series will look the same, and provide the same information, allowing for comparison and better decision-making. In reality, templates beat original thought out of analysts, forcing them to all adhere to the same dry, BLUF-driven short paragraphs, where only the names are different. If one’s eyes glaze over filling one out, you can only imagine what a thrill it must be to read a dozen of them. But the real problem with templates is that they limit analyst initiative. They don’t inspire further inquiry, and if something isn’t asked for on the template, even if it may be relevant, an analyst is unlikely to take the time to hunt it down. Fill-in-the-blank style analysis doesn’t benefit anyone, least of all the analyst. Standardized processes and products can be beneficial; standardized thinking cannot ever be beneficial.

The bias and groupthink prevalent in private intel and geopolitical risk firms present a big problem that are not likely to be solved in the near term if these companies proceed apace. It’s not a theoretical problem. It’s a real problem, that’s having real consequences for the direction the industry is taking. Check back next Tuesday for a discussion of methodologies, and my ideas for how they can be improved to boost the value that private intel/geopolitical risk firms can provide. 

Myths vs. Realities: How Private Intel Firms Perpetuate Myths

This is the second in a series of posts on myths vs. realities in the world of private intelligence and geopolitical risk. If you're new to the site, you may want to start with the Glossary and the first post in this series, on the Private Intel Cycle (scroll down). 

In the previous post, I discussed some of the many myths regarding private intelligence firms' capabilities. It is my firm belief that many of these myths prevent the industry from being understood by clients, and keep good analysts from getting the resources and skills to do valuable, useful work. To a great extent, these private intel firms actively perpetuate many of these myths, giving prospective clients the impression that they're capable of doing more than they can and are actually doing in the production of the "deliverable” or what’s often just a PDF worth several thousand dollars. Given that many clients understand the intelligence business through the lens of James Bond, 24 and Homeland, they can be easy to persuade and awe with impressive-sounding spy terms. Some of the ways that firms do this is through their structures, branding, and marketing materials. Let’s look at a few examples of ways that firms perpetuate these myths: 

The structures/marketing materials: You've all seen the impressive, low light photos of countless "Operations Centers," with the semi-circular desks positioned under large screens. There are no windows and everyone is pretty pale and serious-looking. Each person has 2-3 screens, and they're clacking away on their keyboards while wearing headsets. Some have remarked that these centers look like NASA mission control, promoting an image of 24’s CTU- secret people planning secret things, in secret lairs.  Sure, that makes it sound and look impressive, but "operations" is a terrible misnomer for the passive monitoring that goes on in these low lit, often windowless bunkers. They're not planning covert actions there; they're checking secret “sources” using “proprietary methodology.” These "sources" aren't collectors in the field, they're just media like Twitter and CNN, requiring none of the tradecraft that the IC uses to develop and run a source network.  A more accurate name for such a place would be "Monitoring Center," but it sure doesn't sound as awesome.    

The branding: The private intelligence industry loves to cloak its work in jargon, much of it borrowed, appropriately or not, from the military and intelligence community. Everyone at a private intel firm is an “intelligence analyst” even though many of them couldn’t tell you the parts of the intelligence cycle. It’s a handy answer for Washington D.C.'s most popular/infamous question - "So, what do you do?" and the interlocutor is nearly always impressed by the response, especially if delivered sotto voce in a dark corner of a bar. One of the most commonly borrowed terms is "sitreps," or situation reports, which tell the what, who, where, how and why of a development. These sitreps are typically nothing more than a basic description resulting from basic Internet research and passive monitoring, and rarely includes analysis of detailed local field reports, as the name implies. Another commonly misused term is "red team” and DC is seemingly full of them. The term originates in adversarial training, intended to describe a unit trained to think from the enemy's perspective and operate using their capabilities. In practice, the term "red team" as used in the private intel industry can apply to just about any basic analytic element, as if saying "hey, what do you think President X was thinking when s/he did this?” counts as analyzing a situation from another perspective. Surprise! It doesn't. Red teaming requires training, not just the ability to pretend you know what your enemy is thinking. What many of these teams do is more akin to writing fan fiction. But of course "red team" sounds more spy-tastic, even if they consistently fail to live up to the name.

Finally, the industry’s original jargon sin is the use of the term "strategy." Everyone is a "strategist," despite routinely betraying the fact that they don't know the difference between tactics and strategy. A bombing is not strategic- a bombing is a tactic used to advance a strategy (inciting terror), which is designed to achieve an objective (undermining the government, etc.). Here’s a tip: If a company doesn't have "strategy" or "strategic" in the name, it likely does better strategic consulting than those who do. It's like the Democratic People's Republic- neither democratic, nor a republic. 

The point I’m trying to make here is that private intel firms are doing a disservice to themselves and their clients by perpetuating myths which skew the work they do. They keep clients from better understanding the value private intelligence analysts could provide, if given the adequate training, skills and resources necessary for meeting client needs. The private intelligence industry fills an important and unique need for clients, which deserves to be recognized and understood. Its value it not in being watered-down and only just IC-esque, with borrowed marketing, branding and jargon. Ultimately, private intel firms succeed by understanding client needs and filling them, not by masquerading as private spy firms, then being upset that clients don't understand or value their work. I'll share some of my ideas on how to accomplish this in a future post. 

Check back next Tuesday for a post on bias and groupthink in the private intelligence industry. 

Myths vs. Realities: The Private Intel Cycle

This is the first in a series of posts in the Myths vs. Realities Series. In each post, my goal is to help you better understand the field of private intelligence generally and geopolitical risk consulting specifically. Note that I compare the U.S. Intelligence Community with private intelligence firms not because I think the IC and its methodology is to be considered the ideal, but rather because private intelligence firms are often to compared to, and compare themselves to, the IC. For those who haven’t visited this site before, you may want to start by reading the Glossary. 

For this first post, I’d like to address two things which are often compared: the Intelligence Community’s mission in terms of supporting executive decision-making, and private intelligence and risk assessment firms’ mission in terms of supporting their clients’ decision-making. The biggest misconception that I hear when discussing my work is that many people think private intelligence firms and geopolitical risk firms operate just like a mini intelligence agency. This is a myth. The myth's origins lie in the fact that many former government intelligence professionals transition to private intelligence and risk firms over the course of their careers, and many of these firms were founded by former government officials. As a result, it stands to reason that these individuals sought to reproduce the intelligence cycle at those private firms. (In a forthcoming post, I’ll discuss more about how this myth is often perpetuated by many firms’ marketing initiatives.) 

Let's take a moment to review the basic intelligence cycle: 

Requirements > Planning > Collection > Exploitation > Analysis > Production > Dissemination (Ideally, feedback flows backward through the cycle, helping collectors and analysts refine requirements, update planning priorities, etc.)  

To carry out its mission- providing for national security and supporting the creation of policy- the Intelligence Community has vast resources in terms of personnel, money and capabilities, and seeks to work at the highest speed, meeting as much of its mission as possible through the use of as many resources as necessary. There is a division of labor- collectors employ a variety of sources and methods to gather information, while analysts turn that information into intelligence.

The private intelligence firm's mission is to support executive and strategic decision-making, which helps clients determine best policies and achieve their goals. In this respect, the similarity holds, but that's also where it ends. The resources available to private firms are greatly limited; most of the information is open source, and the tactics are simple and legal. In private intelligence firms, profit, rather than national security are the driving force, and firms want to get the best value per mile, rather than the highest speed at any cost. Private firms have limited numbers of employees, and frequently must rely on local contractors employed for a few hours to collect local information. These contractors often lack the level of vetting and control of human sources in the IC. These firms must also contend with the limited financial resources that are available for use in responding to collection requirements. The analysts and collectors are often one and the same, despite the different skills necessary to succeed in each task. This also introduces substantial bias- analysts just search for enough information to answer a question, and then stop collecting, instead of being able to analyze a wider range of information, some of which could contradict their analysis. There’s a lot to say on this subject as well, and I’ll cover the issue of bias in another post. 

As a result, the private intelligence cycle looks like this: 

Client question > Outlining > Desk Research/Local Contractor Interview/Expert Interview > Basic Analysis > Template > Delivery to Client (Feedback, which should flow back at each step, is nearly nonexistent.) 

What most people expect, of course, is that Former Government Official X is the person writing products. This is almost never the case, since that person is usually in management, and rarely even reviews a product before dissemination. Products are written by junior analysts, many only a year or so out of school, and lacking any Intelligence Community experience, making it hard for them to be able to carry out all aspects of the intelligence cycle successfully. In many cases, one individual is responsible for every aspect, which of course is not the way it's done in the IC. There is little feedback flowing backwards through the cycle. The bottom line is that some parts of the cycle may be successfully reproduced, but the flaws of the cycle are also magnified.  

Let's break down the issues with each step of the cycle. The most important part is the collection requirement. To get a good answer, one must ask the right question. In the IC, there is a clear and longstanding interaction between the producer of the intelligence and the consumer, allowing for greater communication and clarification between the two entities. The government has a more holistic view of the strategic value of intelligence, and tends to operate on broad, long-term requirements. The government is interested in just about everything. For example, the US government is interested in Chinese intentions in the South China Sea. In contrast, private sector clients are usually interested only in, and only willing to pay for, the things that will affect their operations. Their interests are far narrower.  In many cases, the clients themselves are not educated enough to know what may or may not affect them, and there’s little effort to educate them. Again, this is a subject I will return to in the future, when I discuss my ideas for helping integrate geopolitical risk into private sector decision-making, so make it part of an organic process, rather than an add on or afterthought. 

In the private sector, an intelligence or risk assessment firm's goal is to alert clients about issues that may affect operations and help them understand the significance. However, the private firm's clients may not be well versed in the value of the intelligence or the risk assessments, and - for sales reasons- some firms like it that way. Others only want clients to know enough to be awed and willing to pay high monthly retainers. In both cases, clients often don't know the right questions to ask, and therefore, are limiting the value they get for their money. A basic question will have an easy, cheaply acquired answer, making a client wonder why they're paying high fees. The analyst tasked with answering it may amend a convoluted or poorly phrased question, so that it can be answered with information that's easily available. This yields a frustrating answer for clients and may cause them to think the intelligence or risk firm is incapable of meeting client needs. There is a lack of constructive dialogue, and little client education taking place, to help clients understand the value and capabilities of these firms. 

Collection within the IC, as I've mentioned above, is a dynamic and multi-pronged process carried out by collectors, who are distinct from analysts, who require a different skill set and temperament. Collectors in the IC actively search for information in a variety of ways, and many are in the field, establishing long-term relationships with sources. In private firms, there is a lack of unified methodology. The analysts rarely travel, and most of their local information is based on the 3 months they spent in a country while studying abroad. Clients might think a private firm is running sophisticated human source networks, but in fact, collection is also far more ad hoc, and dependent on the connections of the analyst who receives the task, since analysts do their own collecting. In most cases, the entirely of the information used for a product is the result of desk research, thereby weakening the amount of analytical value that can be added.  

When private firms do try to run their own source networks, it’s often done without the tradecraft and discipline used by the IC, and results in somewhat embarrassing revelations. Some readers may recall a certain email revealed by Wikileaks, in which an analyst was urged to use psychological and sexual exploitation to obtain so-called "intelligence" from a "target." Based on what we’ve learned, these firms are likely as effective at those tasks as they are at protecting their sensitive data.

Finally, there’s dissemination, or the delivery of the intelligence to the customer.  There isn’t a great deal of difference between the IC and private firms on this point, and that’s the problem. Despite the wide range of technologies available to private sector firms, there’s been little innovation in terms of the product that customers receive. There is an obsession in the private sector with the term “deliverable,” a word that really just means a 10-page PDF file, and is the end result of an analyst doing desk research, doing some weak analysis of it, and putting the resulting prose into a template. I’ve written previously about why I think this is ineffective. Instead, I think the private firms’ end product should be much more dynamic and useful, but you guessed it! I’ll expand on that idea in a future post, so make it a habit check back here every Tuesday. For now, I'll look forward to your questions and comments...