Archive:Introduction to Political and Economic Risk/Summary

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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