Management’s close ties with key politicians could not quash the social unrest or prevent the Supreme Court from siding with the protesters. Nor did First Quantum’s threat of a multi-billion-dollar lawsuit move the needle. By the end of the year, the mine had produced its last ton of copper and has been sitting idle ever since.

Under the old playbook for managing risk, First Quantum seemed to do everything right. The company had lobbied Panamanian officials and had ironclad international arbitration clauses in place to safeguard its operations. Yet, the failure to keep the mine open highlights the shifting and increasingly complex political landscape in Latin America and the Caribbean. Companies that cling to outdated business strategies in the region can quickly find themselves on the wrong foot, facing substantial losses. But avoiding investment in these rapidly growing economies is equally shortsighted. Instead, leaders must rethink how they engage and adapt to this evolving environment.

Between 2018 and 2022, incumbent leaders in Latin America lost 79% of elections. This turnover trend makes it clear: Political alliances can’t provide the lasting stability companies need. Lobbying national governments — and then relying on costly arbitration when things go awry — must be supplemented with more proactive strategies to manage risk. Four essential strategies must be part of the corporate risk-management toolkit in Latin America and the Caribbean.

Proactive Social Media Listening

Most companies already monitor social media, but they tend to focus on mentions of their own brands.  This reactive approach is ineffective in managing the political volatility that increasingly defines Latin America.

When Chile’s protest in response to a raise in the subway fare began taking shape in October of 2019, it was quickly discounted by the government and corporations alike as the insignificant actions of an isolated, extremist group using a few hilarious protest slogans.

However, a simple scan of social media would have revealed a different reality simmering online. With more cell phones in Chile than citizens, social media was rapidly mobilizing protesters. The result: Chile’s economy shrank by 2.1% in the fourth quarter, wiping out the projected 2.6% annual growth forecasted by the finance minister.

Tough retailers were not directly targeted, several were unprepared, and thus faced severe operational disruptions and even looting as the protests grew. They could have benefited from monitoring and engaging with the rising public discontent.

Today, advancements in big data and artificial intelligence allow companies to identify risk more effectively. For example, Alicorp, a leading consumer goods company in Peru, recognized growing concern on social media about rising prices of basic goods following the Covid-19 pandemic. Although, no one was complaining about the company itself, it launched a line of more affordable basic products with simpler packaging, positioning itself favorably amid growing social tension.

The takeaway is clear: By identifying relevant online conversations, companies can spot trends early and anticipate challenges before they escalate, thereby shifting from reactive to proactive strategies.

Taking a Community-Centric Approach

To effectively mitigate political risk, companies must genuinely adopt a community-centric approach. While this may seem obvious, it’s often underestimated or treated as a checkbox exercise. Yet, it’s essential for long-term success. Too often, businesses align their investments with projects that have the current government’s backing, seeking short-term support. This is a risky tactic. Rising opposition to incumbents across the region shows how fragile political alliances can be. Today’s governments may not be in power tomorrow, and close ties to elected officials can quickly become liabilities when the political landscape shifts.

This was the hard lesson Newmont Mining learned during its Conga mine project in Peru. The company sought to develop a large gold and copper mine in the Cajamarca region, relying heavily on support from the Peruvian government. However, it failed to meaningfully engage the local communities, many of whom depended on the water sources the mine would disrupt. Rather than addressing concerns around water scarcity, land use, and environmental impact, the company focused on maintaining government support.

The result was mass protests, violent clashes, and a state of emergencydeclared by the government. Despite the initial government backing, the project was suspended indefinitely.

The old approach of entering a country by relying solely on lobbying and rolling out pre-set community projects is no longer sufficient. Businesses must adapt their efforts to address specific local needs. A one-size-fits-all strategy won’t work — don’t build a school, for instance, when the community is asking for a water treatment plant.

Suzano, the largest pulp manufacturer in Latin America, operates extensively in regions like Espírito Santo and Maranhão in Brazil, which are mostly populated by indigenous communities who have long opposed foresting activities on the surrounding lands. As a politically savvy, family-founded business, Suzano has learned not to rely too heavily on government backing, but instead to cultivate local support, building long-term relationships and implementing decade-long, comprehensive programs rather than short-term projects. Owing to this continuous engagement, it is able to head off or address conflicts before they escalate into all-or-nothing crises.

To build lasting goodwill and secure their future in Latin America, businesses must invest in community projects that provide long-term benefits, ensuring their local support outlasts any government’s term in office.

Collaborate with Established Local Partners

While local partners with political influence have traditionally been valuable for investors entering new markets, in today’s climate of rising opposition to incumbent governments, such connections can become liabilities. In Latin America, the ideal partners are not those who have aligned themselves with the current ruling party so they can offer insights into forthcoming policy. Instead, business leaders should seek partners who represent established economic groups, have endured over time, understand their countries’ political pendulum swings, and can navigate both routine bureaucracy and unexpected challenges. Local partners with such longstanding operations can be invaluable in evaluating and managing risk, as they have extensive experience navigating change and uncertainty in their respective countries.

For example, when former Mexican President Andrés Manuel López Obrador canceled the international bidding for the multi-billion-dollar Dos Bocas refinery project, global engineering companies like Bechtel were caught off guard. In contrast, local construction company leaders familiar with Lopez Obrador’s nationalist energy policies were not surprised; they saw this move as consistent with his agenda to strengthen state-owned enterprises like Pemex.

In Latin America’s tightly woven markets, identifying the right partners is about far more than crunching numbers or ticking off a know-your-customer checklist. Family-owned and controlled businesses account for more than 85% of all companies and 60% of GDP in the region.Personal relationships are crucial, and executives are often connected through long-standing networks. In these close-knit communities, trust is the main currency. Reputations, often built over generations, carry immense weight. A well-placed partnership can open doors, but a single misstep can just as quickly close them. Success depends on aligning with companies that have developed deep local expertise and shown resilience against both routine disruptions and unexpected challenges.

Planning for Unrest and Ensuring Continuity

Given the political tensions and uneven economic integration across Latin America and the Caribbean, disruptions are frequent, making resilient supply chains essential for business continuity. Leaders must prepare to thrive despite the constant threat of unforeseen disruptions. For instance, when roadblocks and strikes in Colombia protesting a failed tax reform led to a month-long standstill in 2021, many international companies operating there suffered heavy losses. Coca-Cola FEMSA, one of the world’s largest Coca-Cola bottlers, saw its production facilities severely impacted by road blockades and supply chain disruptions. And the trend isn’t slowing — just last year in Guatemala, more than 120 roadblocks were recorded during social protests across the country, highlighting the persistent instability companies face.

In contrast, companies with robust contingency plans tend to fare better during disruptions. Such plans need to be developed from day one when entering a new country, not created during a crisis. Mercado Libre, the Argentine online marketplace, exemplifies resilience in managing supply-chain disruptions across Latin America. In 2020, when union protests in Villa Celina, Argentina, blocked five of its distribution centers, the company was able to maintain operations by leveraging its decentralized warehousing network and last-mile capabilities as well as it’s partnerships with third-party logistics providers and small local deliver firms. Deliveries were rerouted to less affected areas, ensuring continued service.

Disruptions from roadblocks and social protests are likely to persist in Latin America and the Caribbean for the foreseeable future. By anticipating these challenges and developing contingency plans early, business leaders can minimize downtime and maintain customer satisfaction during periods of unrest.

A New Playbook 

Adjusting the playbook doesn’t mean abandoning government relationships or the need for contracts to protect investments. But in a region where political fortunes rise and fall like the tide, doubling down on short-term lobbying is like building on sand, while arbitration and legal action are a high-stakes game that can drag on for years, rack up costs, tarnish reputations, and erode market share. The real antidote to instability isn’t tighter grips on fleeting power structures, but strategies that endure beyond them.

By embracing proactive social media listening, genuine community partnerships, smart local alliances, and dynamic supply chains that are prepped for unrest, businesses can anchor themselves amid the shifting currents. It’s time to swap the old playbook for a long-term vision — one that not only shields enterprises from political turbulence but also empowers them to thrive regardless of who holds office. In Latin America and the Caribbean, the most sustainable investments will be in strategies that can withstand the test of time.