A Guide For OPIC Clients

Costs and Risks Related to Unresolved Conflict

The costs of conflict between companies and communities, workers, or other local stakeholders can be significant, though they may be overlooked or not identified as such. These costs can potentially fall in a range of categories:

Lost Productivity can occur from a forced shutdown or partial disruption of operations; subcontractor and supplier costs from delays; foregone opportunities for future expansion; opportunity cost of staff time required to managing the dispute; delays in deliveries/supplies; and greater regulatory scrutiny.

Capital Losses can result if a conflict damages property or otherwise decreases property value or forces a sale.  The conflict may also make it harder to retain existing lenders, raise new equity capital, or maintain share value.

Reputational Risks may result in higher expenditures on public relations to counter negative information; market share losses through impacts on brand; and declining investor confidence.

Personnel Costs may take the form of hiring specialized staff dedicated to conflict management; low morale, absenteeism and stress-related effects; work stoppages or slowdown; higher cost compensation packages for new hires and retention. 

Redress Costs include court-ordered payments and fines; court administrative costs, and legal fees.

Security Costs may increase due to contracting for additional security services, installing monitoring and security fences, and enhancing training programs.

Insurance-Related Costs may increase due to higher premium charges, higher deductibles, or reduced coverage.