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