Page 56 - E2 Integrated Workbook STUDENT 2018

Chapter 4

Risk

7.1 Risk from globalisation

Globalisation can be a huge opportunity for a company to engage in
business with many countries around the world. However, investing
abroad may be accompanied by risk.

7.2 Political risk

Political risk is the possibility of an unexpected politically motivated event in country
affecting the outcome of an investment.

 Political risk is greater in countries with Groups that can generate
developing economies. political risk

 A change in government can sometimes  Current government
result in dramatic changes for a
business.  Opposition groups

 Political risk could have a direct effect on  Organised interest
a business. For example rises in groups or protest
taxation, nationalisation of foreign owned groups
assets, restriction of payments to foreign
shareholders etc.  Terrorist or anarchist
groups
 Political risk can also be indirect,
because of the effect of government  International
policies on the economy, e.g. changes in organisations such as
interest rates and exchange rates. the UN

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