GM Halts Venezuela Operations Following Plant Seizure

General Motors has ended its operations in Venezuela after authorities in the strife-torn country seized the company’s plant there on Wednesday.

In a statement Thursday, General Motors said that assets, including vehicles, were also seized from the plant as it was taken over by Venezuelan officials while demonstrations surged throughout the country. The company said in a statement that the facility was taken without due process and that it intends to defend its interests.

General Motors has about 2,700 workers and 79 dealers employ 3,900 in Venezuela, according to the Detroit News, which added that “GM’s Venezuelan operations have been a drag on earnings for several years.” Last year the company lost $400 million before taxes in South America, which accounted for roughly 6% of global sales at 583,000 vehicles. GM also took a $720 million charge in the second quarter of 2015 for currency devaluation and asset valuation write-downs as Venezuela’s economy crumbled.

Losses such as the plant and possibly even including the currency hits may or may not be covered by political risk insurance. The challenge in securing such coverage is in accurately predicting when and where it might be needed—companies cannot wait until a threat emerges before securing cover, which is likened to attempting to buy home insurance after your house has caught fire. GM did not immediately respond to an inquiry asking whether the plant was insured for misappropriation.

In its statement, GM said workers at the seized plant would get separation benefits if the government allows such. The statement added that dealers in Venezuela will continue to service vehicles and provide parts.

In its “Credit and Political Risk Insurance Report & Market Update, January 2017,” insurance broker Arthur J. Gallagher ranked Venezuela as one of the world’s riskiest nations, describing the county’s risk potential as “very high,” ranking it just above Libya.

Indeed, this is not the first instance of Venezuela’s government appropriating private assets amid rising nationalist sentiments and domestic unrest. “It fits a broader pattern, in the sense that the government’s response to surges in opposition activity tends to be the deepening of the revolution,” Phil Gunson, a Venezuela-based analyst for the International Crisis Group, told The Washington Post.

Opposition forces on Thursday called for further mass protests against the government. Venezuela has been in crises as forces opposing the government of President Nicolas Maduro accuse the hand-picked successor of populist leader Hugo Chavez of running a dictatorship. Runaway inflation and shortages of food, fuel and goods have stoked nationwide protests that killed three on Wednesday, including a 17-year-old male and a National Guard sergeant.

The fuel shortages are especially ironic given that Venezuela holds the world’s largest proven oil reserves with 298.4 billion barrels, topping Saudi Arabia’s 268.3 billion barrels of reserves, according to 2015 figures from the U.S. Energy Information Agency.

Mitigating Environmental Risks at Argos

Ana Maria Duque is the environmental assessment manager at Argos in Colombia. Here’s what she had to say about the environmental challenges her company faces.

RMM: Please describe what you do for Argos.

AMD: In my current role as environmental assessment manager, I oversee planning and implementation of the processes related to environmental assessment of projects, water and biodiversity management, and administration of environmental liabilities across the three regions where the company is present: Colombia, Caribbean and Central America and the United States. The purpose is to ensure compliance with environmental regulations and the organization’s environmental policy.

RMM: What is Argos’ philosophy on environmental challenges?

AMD: We are committed to develop our production activities responsibly, seeking a balance among profit generation, social development and environmental impact mitigation. This is why we have defined an environmental policy with goals up to 2025. Our goals are to promote prevention, mitigation, correction or compensation of the environmental impacts caused by our operations. Efforts are organized into five pillars that represent our main risks and opportunities: climate change, eco-efficiency (including water and atmospheric emissions), biodiversity, sustainable construction and environmental awareness.

RMM: Why should corporate risk managers be paying attention to environmental issues?

AMD: Corporate risk managers must pay attention to environmental issues since businesses, as well as other human activities, depend on goods and services provided by ecosystems, such as fresh water, timber, climate regulation, natural hazard protection and recreation. At the same time, business activities can negatively impact ecosystems, jeopardizing their ability to supply these goods and services. These dependencies and impacts pose several types of risks and opportunities to companies which need to be properly managed to ensure the sustainability of the business.

RMM: Are risk managers receptive to environmental issues, or is there more convincing to be done?

AMD: Environmental issues are an integral part of the business strategy of large corporations, that have understood the importance of managing environmental issues in order to ensure successful corporate performance and contribute to a sustainable world. There are some small companies, however, that are not completely aware of their dependence and impact on ecosystems, and therefore they have not integrated the management of these risks and opportunities into their business strategy. Environmental awareness is growing among these companies as well, and they are starting to realize the importance of managing these issues.

RMM: How does Argos handle water risks in Colombia and the region?

AMD: We are committed to using water in an efficient and responsible manner, focusing our management strategy in two action lines: efficient water use, by measuring the consumption in our operations and implementing reduction plans; and water risk management, through the identification, evaluation and management of water-related risks at our facilities. Our targets are to reduce by 30% the specific water consumption in the cement business by 2025; and 20% in the concrete production, across all the three regions where we are present. In order to measure our exposure to water scarcity risks, we monitor the water stress degree of the basins where our facilities are located, using the WBCSD [World Business Council for Sustainable Development] Global Water Tool. Furthermore, we assess the exposure to several categories of water risks at a local level using the tools WRI [World Resources Institute] Aqueduct and WWF [World Wildlife Fund] Water Risk Filter. This allows us to prioritize the sites where we need to develop action plans. We have also endorsed the CEO Water Mandate aiming to adopt and implement a comprehensive water management approach in its six action lines: direct operations, supply chain and watershed management, collective action, public policy, community engagement and transparency.

RMM: What other environmental risks should be on the minds of risk managers?

AMD: All risks and opportunities derived from the companies’ dependencies and impacts on ecosystems must be on the minds of corporate risk managers, including those related to biodiversity, air quality and climate change. But more importantly, environmental issues need to be the top priority of the board of directors to ensure that the company invests what is needed to address those issues.

RMM: What do you envision as an ideal interaction between risk managers and environmental assessors/engineers?

AMD: Within the companies, risk and environmental managers should work together in order to raise awareness to the strategic level of the risks and opportunities related to environmental issues, as well as to develop and adopt robust action plans that allow the companies to mitigate their environmental risks and foster their environmental opportunities. This adds value to both the companies and society.

Risk Management Profession Given an ‘A’ by CNN Money

Risk management is a career that has long flown under the radar. Because it is not a common job choice, a frequent question of risk managers is how they found theirPemberton2 way into the profession. Risk managers say they wouldn’t do anything else. The reasons they list include interesting duties that differ from day to day, opportunities for creative thinking and problem-solving, and collaboration with other areas in their company.

Now CNN Money has made the job’s advantages official, listing risk management director as the “second best job in America” of the top 100 “careers with big growth, great pay and satisfying work.”

According to CNN Money:

The job has evolved in recent years to be about more than just natural disasters. Directors are now also tasked with identifying, preventing, and planning for all the risks a company might face, from cybersecurity breaches to a stock market collapse.

Asked why she thinks the job is great, Julie Pemberton, vice president at Diatom Ventures and RIMS 2016 president, told CNN Money:

As they uncover new risks, risk management directors must also advise the company on how to address them. That keeps me totally engaged and gives me the ability to be creative and find solutions for the business. I’m constantly contributing to the business in a meaningful way.

The job as risk management director was given a grade “A” for personal satisfaction, “A” for its benefit to society, “B” for telecommuting and “B” for low stress. Top pay for the job was listed as $200,000 with median pay of $131,000.