I was reading a recent article in Risk & Insurance (my old stomping grounds) about the risks of doing business in Brazil. With the Olympics being held in Rio a few short months from now, the focus is now south of the equator and on the business of doing business in an emerging country. The author, Rodrigo Amaral, does an excellent job of outlining the risks and the atmosphere in the country. He outlines the exposures, which include bribery and corruption, and the lack of strong risk mitigation practices.
From a personal perspective, I couldn’t agree more. I’ve heard the stories from people who have lived there (natives and otherwise).
Brazil is a culture in which life is a fairly cheap commodity, as one American who lived there for three years told me. A close relative who’s a Brazilian native says the attitude of “live for today” is the norm. In fact, her own attitude toward saving money and investing in the future echoes the national sentiment — why save for a future that may not happen?
Many might view this as a Carnaval-type attitude; have fun, live in the moment. And while Brazilians do have a wonderful, warm Latin charm, they also have a resignation about them. They’ve seen the harshness that a culture on the edge of the economic, political and cultural knife can deliver.
It’s a culture where, in Rio at least, millionaires live in high rises that cast shadows on favelas (fa VEL ahs), the slums and shanty towns that are spread throughout the cities in Brazil. It’s a culture of abounding wealth and abject poverty forced to live side by side – an unhappy union that breeds resentment.
It’s also a culture of bravado, from the political games to the way vendors cheat customers, even to how stopping a car at a red light could result in a stolen car or worse, murder. Natives tell me the beaches in Rio aren’t safe if you have anything of value with you. Gangs are known to sweep the beaches and openly steal from beach goers. On my visit to the country, we were fortunate to have been cheated just twice and had things stolen once (from our car — most likely by the valet).
Such crimes often go unpunished. Police, who are reportedly underpaid, are easily bribed, said one São Paulo native. The same goes for obtaining government favors, says another Brazilian, who left the country in hopes of landing work in America — work that didn’t come with the expectation of sleeping with her boss, the one stipulation attached to a job offer she’d received in her home country.
The problems, I’m told, are systemic. Corruption isn’t a front-page problem. It’s ingrained in the society from the top down and, as one native tells me, acted out in the open. While most Brazilians are honest, hard-working people, their culture does little to deter corruption but rather, as one Brazilian put it, allows it to exist for lack of any solid checks and balances.
What does this mean for businesses and risk management? Plenty. While there are real efforts going on in the country to bring solid risk management practices into the local business operations, the undercurrent remains deadlocked in the culture. It’s not enough to build risk management models and hire people to oversee it. Business in Brazil, at least for now, requires a more hands-on, regular review of compliance, liabilities, and local adherence to foreign (US) rules and regulations.