In the early days of cartography, map makers would trace the borders of the known world and, once they got to the end of the lands they knew, write “hic sunt leones”: here be lions. 

The global approach to risk rating in emerging markets is strikingly similar: little-known jurisdictions are all painted with the same broad brush, marked as “high risk” with little regard for local nuances and differences between regions and project types. 

Silvia Andreoletti, Senior Reporter at Trade Finance Global (TFG), spoke to Gabrielle Reid, Head of Advisory at PANGEA-RISK, to find out about how the LORE framework, a new initiative by PANGEA-RISK and Standard Bank, could lead to a more accurate understanding of emerging market risk.

Silvia Andreoletti (SA): How can different projects and locations within the same country differ, especially in emerging markets like Africa?

Gabrielle Reid (GR): Even within a single national jurisdiction, project risk can vary widely across regions. Particularly in large and complex jurisdictions, some provinces or states benefit from stronger local governance, a more stable security environment or even greater experience handling large-scale projects, while others face chronic insecurity or administrative bottlenecks. 

The Localised Opportunity and Risk Evaluation (LORE) framework captures these differences through its Localised Risk Assessment, which examines the subnational environment, including local law enforcement, community relations, logistics, and climate exposure considerations. This helps distinguish between bankable opportunities and no-go zones, even within the same country.

SA: Can you give an example of a country whose risk profile is misunderstood—better captured by the LORE framework?

GR: The Democratic Republic of the Congo (DRC) is often perceived as a uniformly high-risk environment due in large part to ongoing conflict in its eastern provinces. However, this broad categorisation masks substantial regional variation. 

For instance, Lualaba Province is home to well-established mining infrastructure, more consistent governance practices, and a proven track record of handling large-scale investment in the copper and cobalt sectors. In contrast, North Kivu faces persistent conflict and weaker governance institutions. 

The LORE framework allows us to disaggregate these local realities, highlighting where project conditions are materially stronger than the sovereign rating would suggest. This enables more nuanced risk assessment and supports selective investment.

SA: Can you tell us a bit about the factors that the LORE framework considers—like logistical, social, and contractual mitigants—and how they change a project’s risk profile?

GR: LORE evaluates a project across three dimensions: local, sectoral, and resource resilience. 

At the local level, it looks at governance integrity, security, logistics, and social cohesion. These are critical because even a well-funded project can fail if it is located in a region with unreliable access routes or hostile community dynamics. 

The sectoral lens examines whether the industry is mature and well-regulated, or nascent and exposed to policy volatility. 

Finally, the resilience layer assesses the resource’s strategic imperative globally, ESG exposure, and the global supply chain that supports it, from a jurisdiction-agnostic position. Combined, these layers reveal whether a project can realistically overcome its environment.

SA: How does the framework build fluctuating commodity prices into the “resource resilience” aspect of project ratings?

GR: While LORE does not attempt to forecast future commodity prices, it integrates factors that influence a resource’s stability and resilience to price swings. These include strategic demand (e.g. is it critical to the energy transition?), global stock levels, trade diversification, and the elasticity of demand. 

For example, copper and LNG are seen as resilient due to their diversified markets and infrastructure-heavy processing chains, which reduce volatility even when prices shift. In contrast, highly concentrated or easily substitutable commodities may score lower. This approach ensures that price risk is considered not as a headline variable but as part of a broader structural view of resource security and value over the longer term.

SA: Many commodities-related projects, especially in geopolitically turbulent regions like Africa and the Middle East, risk being enmeshed in conflict financing or oppressive regimes. How do banks and credit rating agencies grapple with that risk?

GR: Banks and underwriters address this risk by separating national political context from specific project dynamics. While sovereign ratings are a key starting point, frameworks like LORE add an important additional layer by evaluating whether a project operates in a region with independent oversight, legitimate community relations, and compliance with international ESG standards. 

This helps institutions differentiate between projects that are exposed to conflict financing or poor governance and those that are relatively insulated despite the national backdrop, allowing for more informed and accountable decisions.

SA: Are ethical considerations considered as a factor separate from geopolitical stability when evaluating a project?

GR: Yes. LORE treats ethical and ESG concerns as a distinct input within its resilience overlay. Factors like labour rights, environmental performance, and compliance with international standards are considered separately from political stability. 

This ensures that a project located in a geopolitically stable region can still be flagged for reputational or sustainability risks, and vice versa.

SA: How do banks balance managing risks while still investing in under-financed areas and sectors?

GR: LORE can offer a means to support this through its ability to isolate viable investment opportunities in places that may otherwise appear too risky. Instead of relying solely on national-level ratings, they can identify subnational regions, sectors, or resource profiles that present stronger fundamentals, such as better logistics, regulatory maturity, or ESG resilience. 

This enables more selective underwriting and disciplined exposure, without abandoning under-capitalised markets entirely. It supports decision-making by helping determine whether an opportunity has the underlying fundamentals to justify further investigation or the cost of more in-depth due diligence.