Managing Risk in an Unstable World Summary

In: Business and Management

Submitted By shubo01
Words 591
Pages 3
(Bremmer 2005)
Before entering a new market, the company need to consider many factors. In these factors, political risk is the most important one. Especially emerging market. Political risk is influenced by the passage of laws, the foibles of leaders and the rise of popular movements. All the factors that might politically stabilize or destabilize a country. The significance of any given risk depends on the context of the investment decision. Strategists evaluating emerging markets must be especially vigilant. But even those businesses active only in developed nations should factor political risk into their planning scenarios.

From this article we can know that the type of political risk, how to analyze the potential risk, and how to deal with it. Armed with that understanding, business strategists can minimize risks and seize opportunities far beyond their home shores.

There are five key points in this article. The first one is Politics is everyone’s business. Any company with exposure in foreign markets needs early, accurate information on political developments. There are four reasons. First, international markets are more interconnected than ever before. Second, for good of ill the United States is making the world a more volatile place and that has changed risk calculations everywhere. Third, the offshoring trend is growing. Fourth, the world is increasingly dependent for energy on states troubled by considerable political risk.

The second is What economics can’t tell you. In this point we can know that economic risk analysis and political risk analysis address two fundamentally different question. Economic risk analysis tells corporate leaders whether a particular country can pay its debt. Political risk analysis tells them whether that country will pay its debt.

The third one is Strength against shocks. A nation’s stability is determined by two…...

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