This week CFA Association Russia invited French finance expert Philippe Delmotte to focus on risk management in emerging capital markets. The event took place at the Mazars Moscow office in the form of a business breakfast that gathered around 40 guests.
A guest-speaker, Mr. Delmotte, a CEO of POD Consulting FFF, discussed crises management in emerging capital markets and told what steps companies, working in developing economies, could take to avoid financial disasters. Over the past 25 years, there were several major financial crises in the emerging markets. Although they all had various causes, the similar pattern of a dramatic surge in the forex index prices and interest rates before the crisis could be observed. To prove this, Mr. Delmotte brought up the examples of the 1995 Tequila crisis in Mexico, the 1997 Asian crisis, and the two Russian crises of 1998 and 2014, among others.
When doing business in emerging markets, managers should be prepared to face a crisis in a strong position. Thus, communication and proper preparation are key factors here, the speaker explained. Two ways to prepare is to have accurate, verified figures and put in place right hedges in the forex and interest rates.
“Reviewing your financial needs and securing them could mean the difference between failure and success,” Mr. Delmotte said.
When a crisis has already taken place and there is nothing one can do to avoid it, it’s crucial to stay calm. Decisions made in panic will most likely worsen a situation. During a crisis, companies should have a series of well-practiced action plans and a clear communication strategy, the French expert stressed.
The guest speaker also talked about the use of private placements, as the effective instruments of risk management. As any investment tools, private placements have both pros and cons, which Mr. Delmotte discussed at the end of his presentation.
CFA Association Russia invites everyone to get a dose of morning espresso and listen to finance experts during our business breakfast events. Follow our website and a Facebook page to stay informed about future events.