Archive:Introduction to Political and Economic Risk/Summary

Unit 1.1-Introduction to Political and Economic Risk

Introduction | Cultural Issues | Corporate Risks | Country-Related Risks | Economic Risks | Cultural Risks | Summary | Resources | Activities | Assessment Go to Unit 1.1 | Unit 1.2 | Unit 1.3 Return to Trade Finance Module 1: Political and Economic Risk

Summary

There are many forms of risk associated with business and more so with international business because of the added pressure caused by sovereign governments, geography and culture. A successful international business manager does not go into business with a blind eye. He/she identifies the potential risks, assesses the potential profits, and puts the appropriate risk mitigation tools into place. There are a variety of types of risk associated with international transactions, political, economic and commercial risk, all of which may render a buyer or seller incapable of conducting business (getting paid or receiving shipment). You must understand the complex interactions of the various kinds of risk. A simple way to differentiate commercial and country-risk is provided below:

• country risk = political risk + economic risk
• commercial risk = business transaction risk

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