Political Risk and Public Institutions: Four Steps to Preparedness
In recent weeks, the news cycle has highlighted just how important it is for Canadian institutions to prepare for a wide range of political risk disruptions. In early August, the Saudi government announced that it would be suspending new business and investment transactions in Canada. This has resulted in more than 15,000 Saudi students — including 800 residents working in Canadian teaching hospitals — being unable to return to their studies and jobs.
The loss of these international students will have a significant financial impact on Canadian colleges and universities, while the resulting shortage of residents in Canadian teaching hospitals will adversely affect both quality and access to health care, resulting in delays and reduction in services, appointment cancellations, and more. Managing these disruptions in an effective and timely manner calls for a coordinated, enterprise-level response.
Minimizing Risk Through Planning and Preparedness
There is currently no political risk insurance product available in the marketplace to cover a scenario similar to the one facing Canadian universities and teaching hospitals. But by taking a risk-based approach, hospitals and public institutions, including colleges and universities, can better understand the potential and very real impact of political risks.
Proactively designing and implementing risk reduction techniques can reduce the severity and impact of an event that would otherwise disrupt an organization’s ability to meet its strategic and organizational objectives. At a minimum, organizations should:
- Complete a robust enterprise-wide operational review to effectively determine the impact of risks on the organization and its ability to meet strategic and operational objectives.
- Undertake a comprehensive risk and impact analysis to better determine the severity of potential risks to the organization and ascertain the effectiveness of any controls (if any) that are currently in place.
- Test their response and recovery plans to ensure they are up to date, robust, and able to respond in a timely and effective manner.
- Build future resiliency by developing proactive programs designed to work through response, business continuity, and recovery to business as usual.
For any organization, a proactive, enterprise-level preparedness plan is critical to help minimize the financial, reputational, and operational risks of any kind of disruption. Taking these four steps can help you position your organization to limit the effects of political risks on your operations and bottom line.