Do all companies face the same risk in a given country? No. And that’s what makes dealing with country risk so complicated.

At IMD’s Orchestrating Winning Performance, Professor Omar Toulan opened executives eyes to how they can watch out for risk emanating from countries and even capitalize on it to make a profit.

With a seemingly perpetual volatile economic situation, Argentina would not be the first place you would think a company would go to make money.

But did you know that Argentina had the highest growth in world stock markets in real terms in 2017?

This is just one example of how companies can seize opportunities due to country risk, according to Toulan.

What about the pitfalls?

There are many, he says.

Worrisome political issues include, the broken alliance between Donald Trump’s USA and Europe, and the rise of populism in developed economies. Other issues like inflation, environmental disasters, social activism, and terrorism can also affect a company’s performance. The list could go on.

And while these are the events which make the news, one needs to be particularly conscious of what are called operating risks. These small changes in tax codes and regulations taken together can have a much more sizeable impact on the business community than the rare nationalization.

Other looming wildcards that could potentially throw companies’ balance sheets for a loop: A messy no-deal Brexit, military conflicts in the Gulf or East Asia, major cyber-security attacks, and one we are starting to feel already – trade wars.

The last one stems from a trend that began to creep up over a decade ago, following the financial crisis. Toulan says there have been over 7000 protectionist measures introduced since 2008. The United States – a country that used to be synonymous with free trade – is the worst offender. The EU was second.

This is obviously a threat to most companies that operate across borders.

Over the last 10 years there has been a slowdown in globalization evidenced by exports growing at a slower pace than GDP in recent years.

Perhaps not unsurprisingly, the globalization downturn only takes physical goods into account. We are exchanging data across borders more than ever, though restriction and potential taxation on their flows are also being introduced by certain countries.

Another shift Toulan points out related to country risk is the rapid decline in the dominance of western players. Among the Fortune 500 in the year 2000, there were only four Chinese companies. Today there are nearly 130. At the current growth rate, China will overtake the US as the country with the most firms in the Top 500 in two years. Part of the protectionist reaction by the West is the result of having to share the playing field with new actors from emerging markets.

What can your company do to mitigate risk?

First, there is no way a company can avoid risk. They don’t even have to have operations in a country to be affected. “You don’t have to go to a risky country for it to affect you. That country can come to you.” Think cyberattacks to give just one example.

Beyond that, Toulan gives a 4-point check list for assessing and reacting to risk:

Step 1: Determine your risk appetite, and make sure there is a common understanding

Step 2: Analyze and assess the risks which you are most exposed to.

Step 3: Mitigate those risks via a comprehensive risk reduction strategy including being a good local citizen

Step 4: Learn from your experiences and adapt your response for the next time.

Creativity and agility should be a company’s guiding light in dealing in these situations. Volatility in general creates the opportunity for there to be both losers and winners. Country risk is one such form of volatility, and the firms which are best able to manage it in a proactive manner may find that they are not only able to mitigate those risks but actually benefit from them as well.

Omar Toulan is Professor of Strategy and International Management at IMD.