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Industry Risk


Each industry is unique. The range of issues impacting companies varies among industries and investors should understand these differences when assessing individual companies across non-financial criteria. It is important for investors to focus on those issues that are most relevant to a certain sector or industry when assessing specific companies with regard to labor and workplace practices, human rights, political risk and environmental record and avoid a one-size-fits-all approach.  

The nature of a company’s business and the industry in which it operates can have a great influence on how it treats its workers, where it does business around the world, and the environmental impact from its operations. For example, exploitive working conditions for women and children is a pervasive problem in the garment sector in Asia, while a financial services firm in Geneva likely is more concerned with curbing predatory lending and money laundering.


Our analytical framework seeks to assess our clients’ portfolio companies to determine if the company operates in an industry deemed to be "high risk" due to a changing regulatory environment, unsafe labor conditions, regional instability, institutional investor activism, or access to raw materials. We assess what impact an industry can have on workers employed by the company, its subsidiaries, suppliers or contractors. Using various third-party analysis and data, we have developed our own proprietary rating methodology for assessing factors like labor, human rights, political and environmental impact in 24 major industries to produce an industry risk sub-score.  Three main factors comprise our industry analysis: 

  • Environmental, health and safety risk
  • Political and regulatory risk
  • Human and labor rights risk

Each category is then scored on a risk continuum ranging from “Very High” to “Low” to produce an overall risk score for each industry, giving you a more comprehensive overall picture of the company.