Risk and Reward

The Economist has an interesting story on the risks and potential rewards of doing business in dangerous places.

WHEN, last month, Marsh & McLennan, a huge insurance broker, bought Kroll for $1.9 billion in cash, some gasped at the price. Why so much? Because demand for the sort of services that firms such as Kroll provide—intelligence gathering, investigation and security, especially in nasty parts of the world—is now booming, and Kroll is the brand leader.

Kroll is not alone in making money from dangerous parts of the world. The second-quarter results of Halliburton, a giant, controversial American conglomerate, revealed that work related to Iraq contributed $1.7 billion—around one-third—of the firm's total revenues in that quarter. The revenues of its engineering and construction subsidiary, Kellogg Brown & Root (KBR), were 68% higher than in the same quarter of last year, thanks to government contracts in the Middle East. But 42 of its workers have died so far in Iraq and Kuwait. This week, Pentagon auditors reportedly found that Halliburton had failed to account for 43% of the $4.18 billion that KBR has charged for feeding and housing American troops in Iraq and Kuwait.

Risk and reward always go together. One of the major problems with society today is that we try to remove the risk in everything. What kills me is that we then turn around and wonder why the old rewards aren't there…

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