Assessing Global Assessing Global Political RisksPolitical Risks

Types of Political riskTypes of Political risk

Companies have to evaluate all the Companies have to evaluate all the possible risks that could happen in possible risks that could happen in the potential foreign market.the potential foreign market.

There are four types, and they must There are four types, and they must all be considered.all be considered.

Risk of General Political Risk of General Political InstabilityInstability

Stability = good for business.Stability = good for business. What does “political stability” mean to you?What does “political stability” mean to you?

This is a consideration of businesses who This is a consideration of businesses who are thinking of moving into a new market are thinking of moving into a new market AND companies who are already in foreign AND companies who are already in foreign markets.markets.

Business in those countries might be Business in those countries might be affected which would also hurt profits.affected which would also hurt profits.

Ownership RiskOwnership Risk

Protectionism and nationalism could Protectionism and nationalism could lead governments into takeovers and lead governments into takeovers and nationalization of certain industries.nationalization of certain industries.

If a country wanted to take over it’s If a country wanted to take over it’s transportation or resource transportation or resource infrastructure, companies in these infrastructure, companies in these industries would be affected.industries would be affected.

Operations RiskOperations Risk

There is always a chance that laws There is always a chance that laws change, and new regulations are change, and new regulations are passed or removed.passed or removed.

This would effect how companies This would effect how companies run in foreign countries.run in foreign countries.

Taxes, import restrictions, new Taxes, import restrictions, new employee rights laws, etc.employee rights laws, etc.

Transfer RiskTransfer Risk

Sometimes governments change their Sometimes governments change their currency policies. currency policies.

This could mean that companies are This could mean that companies are not allowed to send money out of the not allowed to send money out of the country.country.

Governments could make their Governments could make their currency “inconvertible.” currency “inconvertible.”

Being made to give foreign earnings Being made to give foreign earnings back to the foreign government is back to the foreign government is called called Repatriation of Earnings.Repatriation of Earnings.

What are some questions What are some questions that businesses should ask?that businesses should ask? Is terrorism a possibility? More than a Is terrorism a possibility? More than a

possibility, but should it be expected?possibility, but should it be expected? Could extremist groups endanger Could extremist groups endanger

society’s stability?society’s stability? Have there been any freedoms taken Have there been any freedoms taken

away from the people?away from the people?

What are some questions What are some questions that businesses should ask?that businesses should ask? How involved in government is the How involved in government is the

military?military? Is corruption part of daily business Is corruption part of daily business

here?here? Could religious or ethnic pressures Could religious or ethnic pressures

threaten your employees/property?threaten your employees/property?

Consequences of Consequences of TerrorismTerrorism

A terrorist attack, or even the A terrorist attack, or even the THREAT of an attack can have a THREAT of an attack can have a large impact on international large impact on international business.business.

What kinds of things can happen? What kinds of things can happen? Think of all the things that Think of all the things that international businesses require to international businesses require to run properly.run properly.

Laws and Legal ConcernsLaws and Legal Concerns

International businesses have to be International businesses have to be aware of all the laws in all the countries aware of all the laws in all the countries that the business operates in.that the business operates in.

EmploymentEmployment Export/ImportExport/Import Human RightsHuman Rights TaxesTaxes Intellectual propertyIntellectual property Defence (Canada/US)Defence (Canada/US)