Engineering risk and its solution
Political Risk Political risk is the type of risk faced by investors, companies and governments. Through appropriate preventive measures and investment, we can understand and control such risks. Broadly speaking, the cause of political risk is responsible business activities, and the government may face the consequences usually caused by political decisions-or "any political changes that may change people's income expectations", as well as possible changes in the purpose of business activities and the changes caused by them. The political risks faced by enterprises can be identified as "strategic and financial risks", or personal income losses caused by non-market factors, such as macroeconomic and social policies (national income, finance, trade, investment, industry, income labor, that is, development and other factors), or events related to political turmoil (such as terrorist incidents, mass riots, regime subversion, etc.), and portfolio investors may face similar financial losses. In addition, the government may face more complicated situations when dealing with diplomatic, military or other actions, which are caused by political risks. In a particular country, there is no necessary relationship between the low level of political risk and the degree of political freedom in that country. Long-term assessment of political risks must take into account the danger of political autocracy, and the stability of this country can only be maintained under long-term autocracy, under which people are forbidden to exchange ideas and commodities with the outside world. It should be recognized that this kind of political risk is also one of the reasons for the turmoil and subversion of such countries. For business activities, the significance of political risk is that it may become a political event, which will affect people's income through direct influence (such as taxes or remuneration) or indirect influence (such as the increase of employment costs). In this way, political risk will be equivalent to an expectation-the inducement of political events, and the reduction of the expected rate of return will further affect people's investment desire. There are two kinds of political risks: big and small. Major political risks will have similar effects on all foreign participants in a specific region, and these effects should be included in the national risk analysis. It is wrong to equate major political risk analysis with national risk analysis, because national risk analysis only pays attention to risks at the national level, including financial and economic risks. Small risks are mainly concentrated in the unique risks of departments, enterprises or engineering projects. Political risk insurance is a kind of insurance that can be completed by industrial and commercial enterprises. It can resist political risks of any scale-risks caused by revolutionary movements or other political factors will cause losses. Insurance. Beneficiaries of project financing (insiders, relevant personnel and participants, etc.). ) obtained the shareholder's stock insurance policy, the lender obtained the insurance of the financing institution, and the guarantor obtained the loan guarantee policy. These policies make it difficult for beneficiaries of project financing to enter some markets by defusing political risks.
National attraction. Emerging markets (developing countries)-the financing income of engineering projects, the highest interest rate, short term, the demand for collateral and the lack of financial expertise of engineering projects, and the lack of foreign banks willing to invest in the local area are all high-risk national risks.
(1) The current plan points to greater opportunities in the future.
(2) Average score 1 ~ 5. Here 1 equals the least likely factor, and 5 equals the most likely factor.
A more suitable source of investment environment data in the Gulf Cooperation Council region can be perceived through our perceptual knowledge: QNB, 2007; WER, 2007. .
(1) Planning according to three characteristics:
① Investment potential;
② Country risk;
(3) the real environment.
(2) Pay attention to the ideal investment point.
(3)KSA and other regions (Qatar, United Arab Emirates, Kuwait) appear in the most popular quadrant.
(4) How many projects in the world refer to the total amount of global project financing in 2007. Adopt project financing method. Where are they distributed? Is project financing appropriate on a global scale?
In 2007, global project financing increased by 20% compared with 2008, reaching a total of $275 billion (worldwide), involving about 650 projects around the world. In 2007, the world's largest 10 project financing projects were:
(1) India-Petrochemical Plant;
(2) Qatar refinery;
(3) South Africa-Railway;
(4) Venezuelan oil refineries;
(5) Saudi Arabia-power plants;
(6) Australia-airport;
(7) Philippines-power plant;
(8) China Petrochemical Plant;
(9) USA-port;
(10) Philippines-power plant.
Appetite refers to the United States, Canada, Europe, Asia, Australia, India, the Gulf region (Qatar, Saudi Arabia, Kuwait, Dubai) and most areas with stable political situation.
Country risk analysis The occurrence of country risk will lead to the change of business environment, and then affect the operating profit and capital value of a specific country. Such as changes in financial factors such as cash control, currency devaluation or changes in management mode, or unstable factors caused by social unrest and the outbreak of civil war, and other potential events that may cause the company to run risks. This term is usually used to describe political risk, while the meaning of national risk is narrow. It is only used to describe the risks that affect the operations of all companies in a particular country. Political risk analysts and credit interest rate decision-making institutions use different methods to evaluate and rank the relative risks of a country. The loan interest rate decision-making institutions mostly adopt quantitative economic model and devote themselves to financial analysis, while political risk analysts mostly adopt quantitative methods for political analysis. But there is no general method between loan risk and political risk analysis (June 198 1, page 77). . It is not only a descriptive way (referring to the description based on objective facts, without emotional judgment, and not involving historical or theoretical analysis, that is, the way the company is currently using), but also a quantitative way. Because most countries' risk assessment is based on the judgment of debt, or the risk is put at a certain level or described in words, there is little difference between the two results, and there is not much difference between quantitative expression and non-quantitative expression. However, the current popular trend is to use a simple quantitative method to assess country risks. The basic reason for this is that people think quantification is more objective. However, the facts still show that quantification does not need any subjective factors, and there are errors in the quantification method.
"Political risks include: war, riots, revolution, confiscation (land, property), frustration of contracts and revocation of licenses."
National risk assessment is a broad concept, which includes political, economic and social factors, and also has the nature of commercial activities. Because these factors are always changing, the risk assessment of a country requires a detailed analysis of various attributes of a special case. However, time and cost (between these constraints) usually limit the depth and breadth of this analysis. Experts in this field believe that "experience shows that things are simple, and we can try and get all the functions that may change in all modes". A more practical and effective method is to analyze a few related factors, that is, five to ten factors. These influential countries actually refer to those risks that will cause losses in cross-border commodity transactions. They are caused by events in some special countries, which are controlled by the government to a certain extent, but private enterprises or individuals are absolutely out of control. In this narrow definition, two points are very clear: national risk involves cross-border transactions, that is, risks not included in domestic commercial activities; The concept of national risk is broader than that of government control risk, which refers to the inherent risk in transactions related to government-controlled enterprises.
On the contrary, if this kind of risk has nothing to do with the decision-making of the leaders of relevant countries, but is related to the management of enterprises, we will discuss the issue of commercial risk. Breach of contract caused by bankruptcy is a national risk (if this bankruptcy is caused by the government's economic management mistakes). But if this is caused by the management error of the enterprise, it is business risk. In some typical country (transfer) risk cases, there will be dangerous situations. In this special case, the enterprise will use local funds to pay the amount required for all foreign contracts. Of course, this "transfer" will be prevented by local laws or relevant rules. Due to the shortage of foreign exchange, the authorities may impose strict restrictions on the transfer of funds.
Although the above description seems to give a precise definition of risk, there are still some "grey areas" or some situations that are difficult to define, such as natural disasters. If the cause of the risk is unpredictable, it belongs to "natural disasters", and according to experts' opinions, it cannot be regarded as a national risk. In any case, it can be considered as the result of force majeure. The concept of national risk includes transfer risk, economic risk and political risk. The risk of repaying loans in domestic currency can be prevented, because those currencies may not be circulated or transferred at all, and those foreign currencies that need to be paid by foreign contracts are called "transfer risks". The problem of transfer may be caused by the economic situation or government management. Therefore, this kind of risk can also be classified as political risk. Political risk is caused by non-economic factors, which will affect the exchange capacity of foreign exchange, or the government's will to fulfill its foreign obligations, and may also make a country's people pay for foreign contracts with their precious foreign exchange, P.J.Nagy, National Risk Assessment, Quantification and Monitoring, 198 1, 13. . The new government may not recognize previously signed foreign contracts, or may amend the law on expropriation (property or land), or amend the legal provisions that prevent lenders from paying for foreign contracts. Economic risks are mostly caused by internal or external economic development, such as poor harvest, wrong economic policies, reduced demand, and decreased national export volume. These factors interact with each other and affect a country's balance of payments. The impact of insufficient foreign exchange is the difficulty of international payment. Emiliol Mayer, International Loan-Country Risk Analysis, 1985, 10. The most common reason. In the national risk assessment, the risk of stopping payment and incurring debt should be emphasized. These risks will increase if some of the above events occur. National risk assessment is to assess whether these events (which vary from country to country) will make debt repayment difficult to achieve. If this happens, this risk may aggravate the debt repayment problem.
Although the main reason for stopping payment belongs to the economic or political category, the ability to pay refers to the lack of sincerity of the lender to repay the loan under certain circumstances, which leads to debt. Part of the reason for the latter situation lies in the lender, or the default caused by the lender for various reasons. The development routes of different countries are different, and the business processing methods in different periods will be different. In addition, under normal circumstances, some countries will find various excuses to avoid their foreign exchange loans, because they are unable to pay foreign exchange loans, that is, unable to pay. On the contrary, some countries may perform their loan repayment contracts well.
Analysis of export trade of some countries and regions in March 2008
Source of major accidents in project financing and market settlement up to 2007: Bloomberg News Agency, May 2008 19. , including loan amount, MBS and CDO related to generalized loans.