Question

What means can managers use to assess political risk? What do you think is the relative effectiveness of these different methods? At the time you are reading this, what countries or areas do you feel pose political risk sufficient to discourage you from doing business there?

Answer 1

Explanation:

Political business risks can negatively affect the profitability of a company or investment in a particular country or location, these risks are inherent in political crises that affect the economy of a location, so it is necessary for managers to assess political risk using analysis indices of risk, assessment systems, past results, country positioning and it is also essential that managers seek experts for better guidance on political risks.

Brazil, for example, is a country that despite attracting a lot of international investment through government incentives, is going through an internal political crisis that gives it greater instability and causes instability so that investors feel safe in investing in the country, due to the possibility of rapid change in the political scenario that can lead to negative economic changes and unforeseen events that mean negative risks for foreign investors.