Case Study Questions:

1.) What risks did Lucia’s team uncover in its analysis of a potential oil venture in Ecuador and
what are the possible consequences of each?

a. Economic risk – The Ecuadorian president asked the international community to pledge
USD 3.6 billion toward the initiative to protect part of Yasuni National Park from
exploration for oil deposits. Six years later, the international community had only provided
USD 13 million, resulting in the cancellation of the initiative.

b. Social risk – Yasuni National Park is considered home to over 4,000 plant species, 173
types of mammals, and many indigenous tribes. Because of the park's unique
characteristics, environmentalists and community groups have been vocal in their
opposition to any development, particularly activities related to oil extraction.

c. Political risk – There is a history of failed contracts in the region due to community and
environmental resistance. Resources has been compelled to withdraw projects from the
country.

d. Personnel risk – there is a continuous threat of the Zika virus in the area. A global health
and travel warning has been issued for all travel to the South American region where Zika
is active.

e. Commercial risk – companies withdraw from contracts due to protests, resulting in the
loss of profits.

f. Foreign Physical Asset risk – the property and equipment that will be used might fail due
to pre-drilling activities that could take up to six months.

2.) Using the risks identified in Question 1, analyze each risk and place a checkmark indicating the
degree of impact (critical, serious or marginal) in the second column.

Risk Degree of Impact

1.) Economic risk – The Ecuadorian Serious
government is known for its financial
difficulties and debt to the Chinese
government.
2.) Social risk - there is a great effect on Critical
indigenous people.
3.) Political risk - corruption may have a Critical
significant impact on the project's profitability.
4.) Personnel risk – the production and Critical
engineering team from PasaSol will be in
 Ecuador for quite some time and the threat of
Zika virus is alarming and risky.
5.) Commercial risk Marginal
6.) Foreign Physical Asset risk Serious

3.) What strategies might the risk analysis team suggest to mitigate the most probable and
impactful risks identified in Question2?

a) Develop contingency plans.

b) Policies and procedures must be carefully reviewed.
c) Develop relationships with the local community. Discuss to the indigenous people the goal
of the project.
d) Acquire insurance.
e) Search for local equipment.
f) Vaccine for the production team.

4.) Based on the overall risk posed to ParaSol should it successfully submit and win the bid, what
should Lucia’s team finally recommend.

Lucia's team should concentrate on important risks like social and political risk to submit and win
the proposal. Human and environmental safety and health protection are the top priorities for
ParaSol. If Lucia and the team manage to protect and consider these factors, they will gain more
government and community support.