If globalization and unbridled optimism—even "irrational exuberance"—were the terms and phrases used to depict the business climate of the 1980s and 1990s, risk and uncertainty are quickly becoming the theme for this decade. The Economist Intelligence Unit (EIU) has responded by introducing new risk services and opening up its existing (internal) country sovereign risk model to its global clientele. (The EIU sovereign risk model for assessing country risk in 100 countries is now being stress-tested by several organizations.) The company also unveiled a new look for its online store.
EIU has launched a new product that delivers to the desktop risk analysis on key emerging markets. RiskWire (http://riskwire.eiu.com) is designed as a business-planning tool to help subscribers assess operational risk within a country or region. Events-driven alerts are published daily, highlighting improved or worsening risks in one or more of the 60 countries covered by the service (with coverage due to expand to 100 countries in the near future). Each RiskWire alert illustrates at least one of the many operational risk factors within a country: security, political stability, government effectiveness, legal and regulatory, macroeconomic, foreign trade and payments, financial, tax policy, infrastructure, and labor market. Providing comprehensive and timely analysis, forecasts, alerts, and background data, RiskWire is available as a channel within EIU's existing ViewsWire service or as a stand-alone database. Pricing for annual subscriptions are based on the number of users within an organization.
Merli Baroudi, director of EIU Country Risk Services, points to the increasing rate at which risks are shifting throughout the world. This makes it harder (and more important) to evaluate accurately what has come before (in order to be able to predict what is likely to occur in the future). With the number of emerging markets rising—and, within each country, both the number and types of risks are on the rise and changing fast—we are apt to experience increased volatility for quite some time. Baroudi is quick to add that risks within developed markets are shifting too. And globalization has led to greater economic interdependence, with the result that unrest experienced in any one region of the world is apt to have repercussions elsewhere.
In addition to these newer risks, we have not eliminated those of the previous century: currency devaluation, social unrest, commodity price volatility, and external indebtedness. With risk parameters shifting, it's imperative that country-credit risk analysis (financial risk mediated through the political and economic system of a country) be paired with an analysis of risks that are associated with operating a business within a country.
EIU's Country Credit Risk model covers 100 countries and evaluates the ability (and willingness) of a country to pay its debt. Risks covered by this model fall into three major categories: currency risk; sovereign risk; and banking sector risk, which is the most difficult to monitor. More forward-looking and predictive is the measurement provided by Country Operational Risk (i.e., a measure of the various difficulties that may have an impact on a business' ability to achieve profitability because of its country's policies). This new risk model, which assesses the overall operating environment in emerging nations, sits at the center of the RiskWire product. Of the 10 major categories of country operational risk listed above, government-effectiveness risk is probably the most important criteria that influences operational risk within a country or region.
At present, EIU's Country Operational Risk model covers 60 countries, including proto- or emerging markets, but the service is expected to grow to 100 countries to match the coverage in EIU's Country Credit Risk model. Users can now customize Country Operational Risk for a particular country by changing the weighting of its risk categories (and any of the underlying indicators), thereby affecting the overall scores and ultimate country rating (A-E, in which A is a country with relatively low risk and E is highly risky). Graph functions/capabilities that exist will prove particularly useful for subscribers who want to compare their own models with the results achieved using EIU's model.
In effect, the Economist Intelligence Unit is turning itself inside out for its clients by providing access to the country data that feeds its economic models and qualitative reports. (Data dates to 1980 and forecasts extend 5 years out.) Sources and definition are given for each data element.
None of this would have been possible prior to the advent of electronic publishing, which EIU has embraced with vigor. During the past decade, the Economist Intelligence Unit shifted from being primarily a print publisher to one that derives nearly 75 percent of its total revenues from electronic products. Improving its online store (http://store.eiu.com)—which makes it easier for users to identify and purchase products, reports, and articles that meet a specific need at a particular moment in time—will be much appreciated by the casual user as well as by those with corporate/enterprisewide accounts. This can, perhaps, drive that percentage even higher.
Pay As You Go, All You Can Access
There's a new look to the Economist Intelligence Unit's online store, which now features faster searching and additional options for payment. While "new" doesn't always equal "improved," in this case, the phrase "new and improved" is not only appropriate, but well-earned. The clean, straightforward on-screen presentation and enhanced navigation make it easier than ever for visitors to identify products that meet their needs of the moment. Users can execute a QuickSearch by keyword, choose a country or product, select a category (economic outlook, political assessment, or risk assessment), and hit the GO button. Prices for each "hit" are clearly posted, with a brief, but detailed summary of an article or the table of contents for any report retrieved by the search strategy.
Given today's rapidly changing political, social, and economic climate, this service is essential for a business community that must assess the countries in which they operate (and to which they market their goods and services) on a continual basis. Lou Celi, EIU senior vice president and publishing director, describes the process: "Design your own knowledge system—choose the exact country intelligence, strategic industry, or management practices publications you need—at the level of access you require."
The improvements made to the EIU store make it an excellent spot from which to begin any country, industry, or market research effort. A search on the EIU store Web site includes not only a 5-year archive of EIU reports, but also those of other publishers, such as eMarketer and IBS Research.
In an area in which subscriptions can run into thousands of dollars, users can now purchase as much as they need, whenever they want. By accessing the online store, they can subscribe to a publication, purchase a single issue (important when the countries in which they are interested change from quarter to quarter), or purchase just the section (i.e., chapter of a report) that they need. Users can simply select the formats and media that suit their needs (e.g., Excel, Adobe PDF, HTML, or print) and within seconds of payment online, they can download purchases to the desktop.
A fixed-fee program offers members of an organization unlimited access to all EIU publications. EIU will even create a referral page on users' intranets that points them to the content they select that's hosted on eiu.com. Access for multiple users within an organization is also possible by utilizing either prepaid accounts or multiple credit card accounts with ID codes (user names and passwords) so that all can benefit from prearranged discounts. A new account-management feature permits users to easily track their purchases and account balances online. The new rewards program offers store dollars for users to redeem at the site.
Founded in 1946, the Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist, CFO magazine, and numerous other specialist journals. Operating a global network of specialist business analysts, economists, and editors in more than 100 countries enables EIU to continuously monitor political and economic developments that might affect business decision making, operations, and profitability. By gathering consistent economic and market data across 195 countries and regions, the firm provides comprehensive analysis of world events, along with objective, original research and forecasts, to subscribers of its print and electronic products. With the recent changes made to its online store, this information is now accessible worldwide to individual purchasers as well as to its corporate clientele.
[Author's Note: An overview of EIU forecast databases appeared in the article "Economic Statistics & Forecasting Data via the Web: A Master List" (Searcher, November/December 2001, pp. 42-70). A discussion of The Economist Web site (http://www.economist.com), with links to related group products, appeared in the March 2002 issue of Searcher ("Getting from Print to Online," pp. 59-65). For more information on EIU's joint venture with EcoWin to create a new international economic and financial database, see the November 5, 2001 NewsBreak at http://newsbreaks.infotoday.com/nbreader.asp?ArticleID=17467]