An overview of major location-based risks from Q1 2015 and how you can use risk information to be more strategic and effective in your global delivery.

1. WHAT TO WATCH:
GLOBAL RISK UPDATE Q1 2015
Christine Ferrusi Ross, Partner & SVP, Neo GroupMarch 26, 2015

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• Globalization Strategy
• Sourcing
• Location Strategy
• Health Checks
• Renegotiations
• Governance
" Since 1999, we have been helping clients
accelerate benefits and minimize risks associated
with global talent and sourcing.
" We have a singular focus on the global services
supply chain.
" We achieve outcomes through deep IP, real-time
analytics, globally recognized experts, proven
methodologies and co-creation with our clients.
" We focus on clients' end business goals, not
global talent as an end in itself.
NEO GROUP’S SINGULAR FOCUS SINCE 1999
We deliver results through three distinct and linked solutions and services:
ADVISORY SERVICES GOVERNANCE
SOLUTIONS
• Design
• Run and Support
• Ongoing Resource,
Contract and Performance
Management Services
SUPPLY MONITORING
& ANALYTICS
• Country
• City
• Supplier
• Real-Time Event Alerts
• Subscription-Based
Monitoring

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TODAY’S PRESENTER
Christine Ferrusi Ross
Christine is a senior vice president at
Neo Group. She’s passionate about
helping clients solve complex global
risk, sourcing, and supplier issues to
achieve better business results.
Christine has helped some of the
largest companies in the world
operationalize their supplier risk
efforts, and she’s a recognized
expert in the space. She’s been
quoted in the Wall Street Journal, on
CNBC, and other national media
regarding supplier risk, outsourcing,
and globalization.

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Ø Major global events that affected location risks
Ø Using location-specific information to lower
supplier-related risk
Ø Taking action on location risks
AGENDA

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THE RISK MANAGEMENT PROCESS
What risks matter?
Assign responsibility for
tracking and taking
action on the risks
Decide the risk
indicators (with specifics
like percentages, not
“declining”)
Create an action plan for
what to do for each risk
as it happens
Track risk data
Take action as pre-
determined
Feedback loop, including
process changes and
supplier/contract
changes

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A FRAMEWORK HELPS STRUCTURE RISK MANAGEMENT
Supply WisdomSM Real-Time Risk Model
RISK
RATING
NEGLIGIBLE LOW MODERATE HIGH EXTREME
SUPPLIER
RISKS
FINANCIAL CLIENTS PEOPLE ALLIANCES
SERVICE
CAPABILITY
GOVERNANCE INFRASTRUCTURE THOUGHT
LEADERSHIP
CITY
RISKS
MACRO-ECONOMIC FINANCIAL BUSINESS INFRASTRUCTURE
GEO-POLITICAL LEGAL SCALABILITY QUALITY OF LIFE
COUNTRY
RISKS
MACRO-ECONOMIC FINANCIAL BUSINESS INFRASTRUCTURE
GEO-POLITICAL LEGAL SCALABILITY QUALITY OF LIFE
2 4 6 8 10

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SAMPLE TRIGGER EVENTS
• Credit Ratings / Downgrades
• Changes in Budget
• Stock Market Volatility
• Tax Changes
• New Special Economic Zones
• Cyber Legislation
• Visa Changes
• Power Imbalances
• Geopolitical Events
• Labor Union Formation & Strikes
• Key Policy Changes
• New Center formation
GEOGRAPHIES

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Q1 UPDATE: GLOBAL LOCATION RISKS
Q1 Risk Events
High Impact Medium Impact Low Impact
Source: Supply Wisdom Q1 2015

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Q1 UPDATE: GLOBAL LOCATION RISKS
• All of the high-impact events were in geo-political risk
category
• Medium-impact events were spread across
categories, like macro-economic risk, infrastructure
risk, and geo-political risk
• Risk categories that had only low-impact events
included scalability risk

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THE RISK MANAGEMENT PROCESS
What risks
matter?
Assign
responsibility for
tracking and taking
action on the risks
Decide the risk
indicators (with
specifics like
percentages, not
“declining”)
Create an action plan for
what to do for each risk
as it happens
Track risk data
Take action as pre-
determined
Feedback loop,
including process
changes and
supplier/contract
changes

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MEDIUM-IMPACT EVENTS: THE TRICKY ONES
• Low-impact events require further monitoring for trend/
pattern identification but need no immediate action
• High-impact events often present a clear course of
action (or if severe enough, prevents a proactive
response)
• Medium impact events aren’t clear cut. They’re neither
scary nor forgettable.
• Do medium-impact events need a response? In what
timeframe is a response needed?
• Too often, the required response is clear in hindsight
but not in the moment

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SAMPLE MEDIUM-IMPACT EVENTS: Q1
• Argentina erupts in protests over mysterious death of
prosecutor
• Brazil’s annual inflation rate hits highest level in almost
10 years
• China blocks VPN services that helped to users
access Google and Facebook
• Multiple power shortages and power tariff hikes in
Manila
• Swine flu deaths in multiple Indian cities

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ACTION DEPENDS ON RISK TOLERANCE
• Tolerance for location risk can be determined by
items like:
– Whether you sell into that location or only drive
operations there
– If it’s a captive-center or work there is done by a
third party
– Ease of switching to another location
– Familiarity with that location

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EXAMPLE: ACTION PLAN FOR MANILA POWER ISSUES
• Sample business: UK-based company does business in Asia, but
Philippines is primarily a vendor delivery location
• Event(s): Multiple power shortages and power tariff hikes in
Manila
• Risk tolerance factors lead the company to want to take a
moderate approach. It’s primarily a third-party location, but that
third party is critical to the company’s operations
• Action steps: research alternative power generation options,
evaluate internal ability to switch work to other third parties that
the company already works with, co-create risk mitigation plan
with supplier
• Final outcome: decision to move to alternative location if power
shortage happens twice more in six months OR tariff increases
again

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EXAMPLE ACTION PLAN FOR INDIA/US: H-1B VISAS
• Sample business: US-based company that uses Indian
resources but sells primarily in the US and Europe
• Event: US Extends Eligibility for Employment Authorization
For Dependents of H-1B Nonimmigrants (H-4 Visas)
• Risk tolerance factors: High cost of switching resources to
other locations, high ability to switch among vendors but
not locations, since this is Indian resources in the US,
familiarity is high
• Action steps: discuss with current suppliers how many
resources might benefit from the change, proactively look
to recruit spouses and dependents immediately (change
becomes effective May 25, 2016)
• Final outcome: TBD

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BENEFIT OF PROACTIVE LOCATION RISK MANAGEMENT
• Smoother operations: Fewer disruptions to delivery or
supply
• Competitive advantage: Proactive management likely
means you were able to achieve a better outcome than
your competitors in that location or working with that
supplier
• More options: Faster, more proactive response means you
have more options than if you had waited (regardless of
what competitors do)
• Ability to innovate: not all risk-events are negative, some
are positive, like a country building more infrastructure in
key locations. Looking for risk-lowering events helps you
create opportunities for your firm

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QUESTIONS

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THANK YOU
NEO GROUP GLOBAL
HEADQUARTERS
6200 Stoneridge Mall Road, 3rd Floor
Pleasanton, CA 94588, USA
ASIA-PACIFIC
HEADQUARTERS
No.13, B-2, 1st floor, C Block
Embassy Heights, Magrath Road
Bangalore-560 025, India
AMSTERDAM, NETHERLANDS
AUSTIN, TEXAS
BOGOTA, COLOMBIA
LONDON, UK
NEW YORK, USA
ATLANTA, USA
SAO PAOLO, BRAZIL
SILICON VALLEY, USA
SYDNEY, AUSTRALIA
CHRISTINE FERRUSI ROSS
Partner & SVP
christine@neogroup.com
781.405.9851
www.NeoGroup.com
www.SupplyWisdom.com
info@neogroup.com