Business Management

Topics: Contract, Common law, Law Pages: 2 (655 words) Published: September 26, 2008
Risks that are common today include: barriers to repatriation of funds, forced sale of equity to host-county national usually at or below depreciated book value, expropriation of corporate assets without prompt and adequate compensation, and Discriminatory treatment against foreign firms in the application of regulations or laws. Terrorism poses a severe and random political risk to company personnel and assets and can, obviously, interrupt the conduct of business. Terrorism is the use, or threat of use, of anxiety-inducing violence for ideological or political purposes. The increasing incidence of terrorism, especially in Latin America is a big concern. Also, the kidnapping of business executives has become quite common. Those events that affect one industry or company or only a few companies are called micro political risk events. 2. What means can managers use to assess political risk? What do you think is the relative effectiveness of these different methods? At the time you are reading this, what countries or areas do you feel have political risk sufficient to discourage you from doing business there? After assessing the political risk of maintaining or investing current operation in a country, managers face hard decisions on how to manage that risk. They can decide to suspend their firm's dealing with a certain country at a given point either by the avoidance or by the withdrawal of current investment. If they decide that the risk is relatively low in a particular country of that a high-risk environment is worth the potential returns, they may choose to start operations there and to accommodate that risk through adaptation to the political regulatory environment that adaptation can take many forms each designed to respond to the concerns of a given local area. 4. Explain what is meant by the economic risk of a nation. Use a specific country as an example. Can economic risk in this country be anticipated? How? A country level of economic development...
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