Corporate managements in a country like Bangladesh, which is continually nurtured by government patronage, are unable to break free of the political control to operate in a commercially focused environment. In a developing scenario, as the economy needs multi-dimensional incentives, private management cannot be allowed to operate independently, although theoretically a separate platform for the autonomy of the private sector to operate has been accepted as a manifest evidence of democratic governance. In the developing nations, governance remains in the hands of the bureaucracy that provides continuity and consistency of public policies but it restricts the talent and creativity of the entrepreneurs.
Public policy makers in Bangladesh lack autonomy and behave subserviently to the authority of highest level decision makers. Corporate managers, therefore, are more concerned with meeting the idiosyncrasies of the decision making authority than engaging in innovative ideas, and fashion their business plans accordingly.
Over the years it has become evident that governments, particularly in the developing nations, failed to deliver services to its citizens and as such scholars recently evolved a concept of "Corporate Social Responsibility" (CSR) to compel the corporate managements to part with their profits or reserve by undertaking some of the social investments to compensate for the failures in the governance.
HARVARD KENNEDY SCHOOL AND CSR: The idea of Corporate Social Responsibility was initiated at the Harvard Kennedy School as a multi-disciplinary and multi-stakeholder programme that seeks to enhance public contributions of private enterprises. It explores the intersection of corporate responsibility, corporate governance and strategy, public policy, and the media. It bridges theory and practice, builds leadership skills and supports constructive dialogue and collaboration among different sectors. It was founded in 2004 with the support of Walter H. Shorenstein, Chevron Corporation, The Coca-Cola Company and General Motors.
The idea, however, was mooted out of an apprehension that the widening gap between classes and failures by governments due to lack of resources and corruption, will create conditions against private enterprises.
It was, therefore, needed to develop a conceptual framework for companies to manage the emerging social risks as they encounter political polarisation, and the corporate social responsibility (CSR) programmes to addressing those risks.
"The corporate risk landscape has shifted significantly in recent years. Larger and more varied risks than ever previously thought have been seen in companies and countries who had believed they were immune from those risks. Rapidly increasing globalisation poses a common challenge-how to integrate the social and political risks of government's instability, political corruption, business corruption, child labour practices, anti-corporate sentiment, terrorism, environmental pollution, and others, into management decisions. To date, no adequate methodology for integrating these issues into risk management has been found. Developing and implementing an appropriate model for decision-making and measurement of social and political risks is critical for improving organisational performance by more effectively (a) anticipating, evaluating, preparing for, and mitigating risks, and (b) managing alternatives.
To effectively manage risk and improve the resource allocation process, risks must be measured and integrated into ROI calculations" (Tamara Bekefi, Harvard University and Marc J. Epstein Rice University).
CRITICISM OF CORPORATE MANAGEMENT: Social thinkers always found fault with corporate management for making allegedly excess profits, as they claimed that it was done by exploiting cheaper labour and overburdening consumers as well. Financial institutions, in particular, are in the forefront worldwide in overcharging the consumers and making profit beyond any ordinary man's imagination. There had been, however, connivance between the governments and the corporate managers for making this profits which in many cases manifested in corruption. The risk that emerged between the developed nations and the less developed nations were burdened with persistence of poverty, mal-governance and under-development that needed to be addressed. A general consensus was reached to target a Millennium Development Goal (MDG) to enable the poorer nations to overcome their predicaments. International and multilateral institutions were charged with the responsibility to finance and engineer activities to reduce the risk levels. The idea was then extended to include private enterprises in participating in CSR activities.
"Enterprise Risk Management (ERM) has entered the mainstream of corporate consciousness over the past decade. Corporations and financial institutions globally have spent a great deal of money to develop and implement systems and processes to assess and manage risks more effectively. The basic "no surprises" mission of ERM is to help protect companies from preventable losses. Identifying, measuring and continuously monitoring risks are the core competencies of ERM. Yet, beyond capital protection, ERM can serve a more strategic function. In understanding clearly where and how risk arises in a business, management can drive higher-quality returns to the bottom line", wrote Samuel A. DiPiazza Jr., Chief Executive Officer PricewaterhouseCoopers International Limited jointly with Ian Bremmer, President, Eurasia Group
POLITICAL RISK: Understanding risk partly as probability and partly as impact provides insight into political risk. For a business, the implication for political risk is that there is a measure of likelihood that political events may complicate its pursuit of earnings through direct impacts (such as taxes or fees) or indirect impacts (such as opportunity cost forgone). As a result, political risk is similar to an expected value such that the likelihood of a political event occurring may reduce the desirability of that investment by reducing its anticipated returns. Macro-level political risk looks at non-project specific risks. Macro political risks affect all participants in a given country. A common misconception is that macro-level political risk only looks at country-level political risk; however, the coupling of local, national, and regional political events often means that events at the local level may have follow-on effects for stakeholders on a macro-level whereas
Micro-level political risks are project-specific risks. In addition to the macro political risks, companies have to pay attention to the industry and relative contribution of their firms to the local economy.
Bangladesh has been on the list of political risk for the foreign investors from the very beginning. However, in addition to the foreign investors, Bangladesh is considered a politically risk-prone country even for its local investors. Therefore, investments were made in Bangladesh only in the public sector until 1995 when local private enterprises took the risk of investing as potential export markets opened up. Investments still to date is continuing under political mal-governance and fluid social security, as bottom-line profits are almost guaranteed by access to overseas market. Domestic demand may potentially exist but realisation falls far behind export priorities as investors are confident that whosoever may be in the government will always protect the export earnings.
Both fiscal and monetary policies in Bangladesh have never been private enterprise-friendly and on the contrary, caused barriers to expansion and profit earnings. Recent realisation by public policy makers of the importance of export earnings has led to selective modifications to archaic and ineffective regime and regulations have been implemented. But it may have brought selective benefit, selective profit and selective advantages to both public and private enterprises but it has not yet made Bangladesh a risk-free nation.
The writer is a business consultant.
kbahmed1@gmail.com
© 2026 - All Rights with The Financial Express
