Political risk in international business can make or break a company's global operations. From government seizures to currency restrictions, businesses face numerous challenges when expanding abroad. Understanding these risks is crucial for developing effective mitigation strategies.
Companies use various tools to assess political risk, including country analysis and . To mitigate risks, firms employ strategies like , , and . Staying informed about political developments helps businesses navigate challenges and seize opportunities in the global marketplace.
Understanding Political Risk in International Business
Forms of political risk
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Top images from around the web for Forms of political risk
Political Violence and Economic Growth View original
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Economic Sanctions | All About World Politics View original
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International Political Risk Management : Looking to the Future View original
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Political Violence and Economic Growth View original
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Political risk encompasses potential government actions or instability negatively impacting business operations affects profitability, assets, or personnel safety
involves government seizure of private assets without fair compensation includes direct (outright takeover) and creeping (gradual erosion of ownership rights) forms
restricts converting local currency to foreign currency limits capital repatriation (Argentina 2001, Venezuela 2003)
encompasses civil unrest, riots, terrorism, war, military conflicts, coups, or sudden regime changes (Arab Spring 2011)
alter business landscape through new laws or policies (GDPR in EU)
or sanctions limit market access or operations (US sanctions on Iran)
occurs when governments interfere with existing agreements
targets specific industries or foreign companies (windfall taxes on oil companies)
Tools for risk assessment
evaluates macroeconomic indicators, political stability indices, corruption perception index (World Bank, Transparency International)