1 Country Risk. 2 Country Risk Definition The Likelihood that unexpected events within a host country will influence a clients or a governments ability.

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Presentation transcript:

1 Country Risk

2 Country Risk Definition The Likelihood that unexpected events within a host country will influence a clients or a governments ability to repay a loan or make a payment Sovereign Risk/Political Risk Unilateral repudiation of foreign obligations Economic Risk Inability to pay

3 Political Risk Firm Specific - governance issues - business risks - industry - goal conflicts

4 Political Risk Handling Firm Specific Risk - Investment agreement * funds flows * transfer prices * export licences * tax * access to markets

5 Political Risk Handling Firm Specific Risk - Insurance * government * private

6 Political Risk Handling Firm Specific Risk - Operating Strategies * local sourcing * location * transportation * technology * markets (brand name) * finance (thin equity, multi source)

7 Political Risk Country Specific Risk - Blocked Funds/ Transfer Risk * other fees * transfer pricing * leading and lagging * fronting loans * other unrelated exports

8 Political Risk Country Specific Risk - Cultural and Institutional Risk * ownership structure * human resource norms * religion * nepotism and corruption * intellectual property rights * protectionism

9 Political Risk Global Specific Risk - Terrorism - Anti-globalisation - Environmental Concerns

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