Above Ground Risk – Definition

Cite this article as:"Above Ground Risk – Definition," in The Business Professor, updated June 8, 2019, last accessed October 26, 2020, https://thebusinessprofessor.com/lesson/above-ground-risk-definition/.


Above Ground Risk Definition

Above-ground risks comprise non-technical risks like regulatory, political, security, and environmental risks which may affect mining and energy companies in some of the most unstable regions in the world and also Western economies, effective legal systems, and strong governance.

A Little More on What is Above Ground Risk

Above-ground risks are important in the production, exploration, and mining sectors, with reference to the border market. Usually, there are greater risks on Earth and they are less difficult to lessen, unlike underground operations. In border markets that are relatively modest, like Sierra Leone or Tanzania, small scale corruption by foreign companies might expose foreign companies to risks involving reputation in both their countries of origin and in their destination countries. A major problem of mining and energy companies has been the management of corruption risks and corruption.

Above the ground risk in hotspots do not only possess political and regulatory risks, but also security, armed conflict, and corruption. The risk of investing in this field has been increased by Western environmentalists, whether it is the Canadian indigenous people’s claims, staging protests against the protests of Dakota Access oil pipeline, or the anti-Franco opposition in Europe – which resulted in the suspension of the cracked campaign numbers.

There are certain above ground risk that can be anticipated like tax increases and labor disputes. Not logical, Latin American politicians have hiked mining royalties, and there has been a sharp increase in commodity prices after the financial crisis.

But, in certain countries, ransom activities or schemes are only required. The Venezuelan nationalization sample project, the oil, as well as, mining industry which foreigners own, brought about the investment and oil production capacity collapse, and some foreign oil companies suffered great losses. In 2018, Chevron carried out an evacuation on its leaders for 2 employees that were arrested simply because they did not enter a supply contract with PDVSA, the state-owned company.

References for Above-Ground Risk

Academic Research on Above Ground Risk

The relationship between corporate philanthropy and shareholder wealth: A risk management perspective, Godfrey, P. C. (2005). Academy of management review, 30(4), 777-798.

Enterprise risk management: from incentives to controls, Lam, J. (2014). Enterprise risk management: from incentives to controls. John Wiley & Sons.

Risk management for overseas construction projects, Zhi, H. (1995). International journal of project management, 13(4), 231-237.

The Economics of Entrepreneurship: What we know and what we don’t, Parker, S. C. (2005). Foundations and Trends® in Entrepreneurship, 1(1), 1-54.

Technical entrepreneurship: what do we know?, Cooper, A. C. (1973). R&D Management, 3(2), 59-64.

Emerging business, emerging field: Entrepreneurship and the family firm, Hoy, F., & Verser, T. G. (1994). Entrepreneurship theory and practice, 19(1), 9-23.

The ethical and environmental limits of stakeholder theory, Orts, E. W., & Strudler, A. (2002). Business Ethics Quarterly, 215-233.

The limits of strategic rationality: Ethics, enterprise risk management, and governance, Weitzner, D., & Darroch, J. (2010). Journal of business ethics, 92(3), 361-372.

Maidum’s challenge, legal and governance issues in dealing with cross‐border business enterprise group insolvencies, Sarra, J. (2008). International Insolvency Review: Journal of the International Association of Insolvency Practitioners, 17(2), 73-122.

Effective responses for proactive enterprises: Business continuity planning, Frost, C. (1994). Disaster Prevention and Management: An International Journal, 3(1), 7-15.


Was this article helpful?