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Business + risk analysis = safer investments abroad

By Frederic A. MoritzStaff correspondent of The Christian Science Monitor / July 20, 1983



New York

His slow, deliberate speech makes him sound more like a college professor than a spy. In fact, he is a bit of both. David Raddock, who holds a PhD in political science, is a former University of Texas professor who ''has come in from the cold.'' Five years ago he left the university's Dallas campus to join the small but slowly growing breed of professionals known as political risk analysts.

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Their purpose: to help save American companies hundreds of thousands of dollars they might lose from investing in the wrong country, in the wrong way, at the wrong time.

What does this mean in practice?

Says Dr. Raddock: ''Let's just pretend that a company already involved in an Asian country has an opportunity to expand its operations with the help of a guy high in the country's government. This company might want to know how securely in power this man really is. The analyst might ask: If this man is thrown out of office, will the company's new operation be attacked and perhaps terminated on grounds that it was a product of this man's corruption? He might also ask: Is there any way to guard against this possibility?''

About 100 Americans are now engaged as full-time political risk analysts, in addition to several hundred part-timers. Their ranks include political scientists and other academics, ex-economic analysts, ex-Foreign Service officials, and ex-CIA employees.

Dr. Raddock's craggy, full-face beard still looks more in keeping with a college campus than with the Washington, D.C.-based multinational holding company Enserch. Interviewed during a visit to New York, this Columbia University-trained China specialist expresses satisfaction with his varied assignments. He says these have drawn him into ''new vistas'' as a ''generalist, '' who now assesses ''political risk'' in Latin America and Africa, as well as in his original area of expertise, Asia.

''I changed professions because I found academics too pompous and ingrown. My present job combines the best qualities of being a professor with a quality of entrepreneurship. You can see the results of your work in terms of a company's profits,'' he explains. ''And your work is appreciated.''

The salary for political risk analysts is at least twice that of an academic. Some 62 percent of political risk analysts answering a recent survey said they earned at least $42,000 a year, 34 percent earned at least $55,000, and 10 percent topped $70,000.

The profession didn't get off the ground until the 1979 Iran revolution, which demonstrated the need to understand the impact of religious ferment on political stability and foreign economic interests.

The profession continues to grow, although the rate has slowed, according to a number of risk analysts. In the wake of growing indebtedness by Latin American and other nations, banks are shifting back from an emphasis on a country's political stability to the more traditional emphasis on a country's overall ability to repay loans, notes James Thornblade, vice-president of the First National Bank of Boston.

Still, corporations have increasingly felt it desirable to supplement reports from employees stationed overseas with the thinking of academics and former government officials stationed in the home office. A surplus of PhDs unable to get university teaching jobs has provided a reservoir of applicants happy to fill the need.