Four critical factors determine the physical survival of a nation. These include both natural and human-made conditions, which become challenging to manage once they emerge. A combination of these factors can spell disaster for prospective investors, as the living standards of the country's inhabitants become severely affected.

It’s essential to evaluate how these risks correlate with investments, financial instruments, or business operations tied to specific regions. Key considerations include where the primary consumers of a business's products and services are located, whether the company's headquarters is situated in such areas, and whether financial assets—such as bonds, stocks, and currencies—originate from regions with lower survival stability. These factors influence exposure to the realities of countries that may not consistently provide sustainable conditions for robust economic activities.

Natural Disaster

A country frequently affected by natural disasters struggles economically, as economic growth largely depends on trade volume, quantity, and frequency. Areas prone to hurricanes, fires, floods, droughts, or earthquakes are generally high-risk locations for most businesses. Some disasters occur regularly, making certain regions unattractive for investment. A strategic starting point for investment analysis involves examining the frequency of natural disasters in target countries. This approach highlights potential risks to trade and business continuity due to future disruptions. Before investing, you should evaluate the basic stability—or the "Survival Pulse"—of a country. However, there are exceptions; investing in essential infrastructure—such as utilities or transportation—can be viable, as these remain necessary even after disasters.

War, Insurgency, Terrorism and Insecurity

In war-torn countries, trade is limited because people usually restrict their consumption to basic essentials. Since demand drives production, limited consumption means fewer opportunities for diverse goods and services. However, certain products, like weapons and ammunition, become highly valuable during conflicts. Investing in such situations can be explored, but most individuals cannot directly trade in weapons. Instead, investing in military contractors from countries supporting the conflict serves as a practical alternative. Success in this strategy requires anticipating conflicts, buying stocks of the right military contractors at the right time, and at a fair price. Selecting suitable military contractors involves deeper analysis beyond this immediate discussion.

Geographic risk mapping should not categorize regions within a country simply as peaceful or non-peaceful; instead, a holistic approach should be adopted, which involves considering both specific regions and, in all cases, the country as a whole. However, isolating investments within specific localities is generally not advisable, as war typically reduces a country's population, economic activity, global importance, and internal interconnectedness. Investing in only one part of a country is risky because the effects of war often extend beyond the affected region, impacting the entire nation.

Moreover, the laws governing a country typically come from the federal or central government. Although local jurisdictions may have their own municipal or state regulations, broad economic policies usually fall under central or federal government control, particularly in secular states. Understanding the relationship between federal oversight and local regulations is crucial. Federal laws usually set foundational economic policies, while local laws specify operational details. Therefore, if one region experiences conflict, other regions are also impacted due to reduced overall productivity and economic stability.

Another form of social unrest involves insecurity and internal conflict, which are typically less severe than a full-blown war. Insecurity often underlies multiple issues and is usually symptomatic of deeper problems, making it an important factor to consider. Frequently, insecurity persists over an extended period before escalating into serious conflict. Terrorism and insecurity typically indicate a disconnect among social classes, highlight a severely dysfunctional education system, and reveal unequal economic opportunities, among other underlying issues. While there are numerous related aspects, our focus here is examining insecurity in relation to a country's survivability. Surprisingly, the United States of America appears on this list, despite coincidentally having the strongest economy in the world.

Some Terrorism Ranking Index 2024

Geography & Geology

Consider a country's geography in terms of its proximity to the ocean. Ocean access allows a country to participate more easily in international trade and reduces shipping costs by providing efficient transport routes. However, being an island is not particularly advantageous, except for tourism or investment diversification, as islands tend to have fewer opportunities and less interconnectedness compared to mainland countries.

Landlocked countries, on the other hand, face significant disadvantages. The geographical location of a country within its continent is also crucial. While being centrally located on a continent is not necessarily a critical survival factor, it is an important consideration that should not be overlooked. However, not being centrally located can sometimes be a blessing in disguise. For instance, I recently read that in the event of a nuclear war, Australia and New Zealand would be among the best countries to migrate to, as their geographical isolation increases the chances of survival and protection of physical assets, such as gold.

Bolivia, Paraguay, Andorra, Austria, Belarus, Czech Republic, Hungary, Liechtenstein, Luxembourg, North Macedonia, Moldova, San Marino, Serbia, Slovakia, Switzerland, Vatican City, Botswana, Burundi, Burkina Faso, Central African Republic, Chad, Ethiopia, Lesotho, Malawi, Mali, Niger, Rwanda, South Sudan, Eswatini, Uganda, Zambia, Zimbabwe, Afghanistan, Armenia, Azerbaijan, Bhutan, Laos, Kazakhstan, Kyrgyzstan, Mongolia, Nepal, Tajikistan, Turkmenistan, Uzbekistan.

Weather 

Countries with extreme weather face certain limitations, but these conditions also present opportunities—depending on how they are leveraged. Extreme weather tends to slow down trade compared to regions with more favorable climates. It also impacts economic activities, as the global economic model established since World War II has largely relied on people conducting transactions in physical spaces. Extreme weather makes this challenging. However, this does not mean we should overlook the fact that many economic activities now take place virtually.

Countries affected under Climate Risk index (CRI) 1993 to 2022

Dominica, China, Honduras, Myanmar, Italy, India, Greece, Spain, Vanuatu, Philippines

Countries affected under Climate Risk index (CRI) 2022

Pakistan, Belize, Italy, Greece, Spain, Puerto Rico, United States of America, Nigeria, Portugal, Bulgaria

Countries with harsh weather conditions are generally not ideal for major investments, but there are exceptions. Such regions can be valuable for harvesting minerals, making them attractive for investments in mineral resources that are expected to become mainstream in the future or minerals that will remain useful for decades to come. For example, the Arctic region, despite its extreme cold and harsh climate, is rich in valuable resources such as oil, natural gas, and rare earth minerals. Similarly, lithium—crucial for battery production—is found in the high-altitude salt flats of Bolivia, a country that experiences extreme weather conditions. Additionally, countries like Kazakhstan and Mongolia, which face severe winters, are major producers of uranium and copper, both of which are essential for energy and technological advancements.

Do not analyze these factors in a purely linear manner; instead, assess them at multiple levels—starting from a continental perspective, then narrowing down to continental zones, individual countries, and finally, specific regions within a country. Timing is one of the most critical factors in investment. Even if all indicators suggest an opportunity is promising, poor timing can render an otherwise sound investment unprofitable. If the timing is off, you may end up merely funding the gains of others rather than benefiting from the investment yourself.

Despite the challenges, countries that rank unfavorably in economic and geopolitical standings can still present investment opportunities. However, the potential returns must be significantly higher than the initial investment to justify the associated high risks. Investing in such countries requires a calculated approach, ensuring that the rewards align with the level of risk involved. Due to the volatility, only a small portion of an investment portfolio should be allocated to assets closely tied to these countries—ideally, no more than 5%.

If you are considering an investment in a company whose primary economic activity is based in a country prone to a combination of natural disasters, war, unfavorable geography, and extreme weather conditions, it is not advisable to pursue that investment—even if other aspects appear attractive. The risks far outweigh the potential benefits, making it an unwise choice for exploration.