Last updated on Jul 7, 2024

You're venturing into a new emerging market. How can you navigate the risks effectively?

Venturing into a new emerging market is an exciting opportunity, but it's fraught with potential risks that can undermine your success. To navigate these risks effectively, you need to develop a robust risk management strategy. This involves identifying potential risks, assessing their impact, and implementing strategies to mitigate or avoid them. By understanding the unique challenges of the new market, such as cultural nuances, regulatory frameworks, and competitive landscape, you can make informed decisions that protect your investment while capitalizing on the market's potential. Engaging with local experts and building a network of contacts can also provide valuable insights and support.

1 Assess Risk

Risk assessment is a critical first step in managing the uncertainties of a new market. You need to conduct thorough research to understand the political, economic, social, and technological environment of the region. This will help you identify the specific risks that could affect your business, such as currency fluctuations, political instability, or legal hurdles. Quantifying these risks in terms of their potential impact and likelihood will enable you to prioritize them and focus your resources where they're needed most.

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2 Legal Nuances

Understanding the legal framework of an emerging market is non-negotiable. You must familiarize yourself with local laws, regulations, and compliance requirements. This includes intellectual property rights, labor laws, tax obligations, and any industry-specific regulations. Failure to comply with local laws can result in fines, legal disputes, or even expulsion from the market. Therefore, it's advisable to consult with legal experts in the region to ensure that your business operations are above board.

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W.B. Carrington, MBA, LSSMBB, CTPRA, GRCA, GRCP

The GRC & AI Authority | Leading GRC & AI Expert | Keynote Speaker | LSSMBB | Board Advisor | ISO 27001 Lead Auditor | Medically Retired U.S. Marine | Purple Heart Recipient
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Understanding the legal landscape of an emerging market is vital. This includes compliance with local regulations, intellectual property laws, and data protection requirements. My role as a compliance officer has involved ensuring adherence to various regulatory frameworks, which is essential for legal risk management. Use Case: During my tenure at Sterling Bank & Trust, I spearheaded the implementation of a comprehensive compliance program that ensured adherence to federal regulations, resulting in a 20% reduction in compliance-related fines and penalties.

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3 Cultural Insights

Cultural intelligence can be your ally in an emerging market. Each market has its own cultural norms and consumer behaviors that can significantly affect your business strategy. For example, marketing tactics that work in one country may not resonate with consumers in another. Understanding these cultural nuances will help you tailor your approach to better connect with local customers and stakeholders. This might involve adapting your product offerings, communication style, or business practices to align with local expectations.

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Tal Raymond

Founder | Helping Series B & beyond win with anti-bribery & corruption compliance solutions | ex-Deloitte
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One must be familiar enough with the new market and culture in order to effectively be comfortable with the new risks it entails. For example, doing business is a "high risk" country defined by transparency international, implies reassessment of company policies and processes and design of more rigorous controls. Important to map out major risks and country differences, utilise local knowledge and legal teams to assist.

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4 Financial Strategies

Effective financial management is key when entering a new market. You'll need to navigate currency risks, set up efficient money transfer processes, and manage the costs of establishing a local presence. It's also important to develop a realistic budget that accounts for potential financial pitfalls. This might include setting aside contingency funds or securing insurance to protect against unforeseen events. By keeping a close eye on your finances, you can ensure that your venture remains viable even in the face of economic uncertainties.

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W.B. Carrington, MBA, LSSMBB, CTPRA, GRCA, GRCP

The GRC & AI Authority | Leading GRC & AI Expert | Keynote Speaker | LSSMBB | Board Advisor | ISO 27001 Lead Auditor | Medically Retired U.S. Marine | Purple Heart Recipient
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Developing a sound financial strategy is crucial for managing risks in an emerging market. This includes budgeting for unforeseen expenses, securing funding, and managing currency exchange risks. My background in risk management includes financial risk assessment and developing strategies to safeguard financial stability. Use Case: At G1VE | Technologies, I was responsible for developing financial models to assess the impact of various risk scenarios on our operations. This proactive approach helped us maintain financial resilience during market fluctuations.

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5 Market Engagement

Engaging with the market means more than just selling your products or services. It involves building relationships with local customers, suppliers, and other stakeholders. This engagement can provide you with valuable feedback and insights that can inform your strategy and operations. Additionally, establishing a strong local presence can help you build trust and credibility in the market. This might involve hiring local staff, partnering with local businesses, or participating in community events.

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6 Strategic Partnerships

Forging strategic partnerships can significantly reduce the risks associated with entering a new market. By collaborating with local firms or industry players, you can leverage their market knowledge, networks, and resources. These partnerships can take various forms, such as joint ventures, distribution agreements, or supply chain collaborations. The right partners can help you navigate local complexities, speed up your market entry, and provide a buffer against potential risks.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Mohammad Salman Khan

Founder & CEO - KYR Consulting, Training & Advisory Solutions | Corporate Trainer - Risk Management Helping Organisations Mitigate Risks & Navigate Uncertainty
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When venturing into a new emerging market, navigate risks effectively by: 1. Market research: Conduct thorough research on the market, culture, and regulations. 2. Risk assessment: Identify potential risks and assess their likelihood and impact. 3. Local partnerships: Collaborate with local businesses, experts, or consultants. 4. Cultural understanding: Develop a deep understanding of local customs, values, and norms. 5. Regulatory compliance: Ensure familiarity with local laws, regulations, and standards. 6. Flexibility: Be prepared to adapt to changing market conditions and regulations. 7. Market monitoring: Continuously monitor market trends, consumer behavior, and competitor activity.

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You're venturing into a new emerging market. How can you navigate the risks effectively?

1

2

3

4

5

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7

1 Assess Risk

2 Legal Nuances

3 Cultural Insights

4 Financial Strategies

5 Market Engagement

6 Strategic Partnerships

7 Here’s what else to consider

Risk Management

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You're venturing into a new emerging market. How can you navigate the risks effectively?

1

2

3

4

5

6

7

1 Assess Risk

2 Legal Nuances

3 Cultural Insights

4 Financial Strategies

5 Market Engagement

6 Strategic Partnerships

7 Here’s what else to consider

Risk Management

Rate this article

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