Chapter 8. Political Risk Analysis

Description and Purpose

Political risk arises from actions taken by a government or any instability caused by unexpected government decisions or events that may lead to business loss. In many industries and markets, government decisions can make or break a company’s fortunes. As such, political risk analysis (PRA) is a valuable tool when considering the impact of governmental policy, politics, and public events on a company’s business and its competitive position.

The definition of political risk is important in understanding the strategic rationale by which you should examine it. Too narrow a definition can result in you working with improper conceptualizations and badly directed data gathering and selection. ...

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