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Essay / Research Paper Abstract
This 10 page paper considers political risk in the commercial environment. The paper defines what is meant by political risk, and then considers tools which are used to both measure and reduce the risks. The bibliography cites 8 sources.
Page Count:
10 pages (~225 words per page)
File: TS14_TEpolrsk.rtf
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Unformatted sample text from the term paper:
may find that they face changes which they cannot control. Governments may change regulations and statutes, adjust trade tariffs and policies, which may result in increased costs, changing statutory requirements,
moving markets and in extreme cases the risk may be such that the company will loose the business, as seen in 1999 in China. A good example of political
risk occurred when the government involvement by the Chinese Ministry of Information Industry stated that there would not be allowed foreign investment in the Internet in China, this involved
the closing down 40 foreign investments on mobile telecommunication by foreign companies (Doebele, 2000). These were investments which had been negotiated with a state owned company, China Unicom and had
been made it what appeared to be a stable market (Doebele, 2000). Other political risks may be as wide ranging as terrorist attacks and the way that policies will impact
on licenses or contracts that are granted. Political risk, although histrionically always present, has only recently become widely acknowledged due to recent events and the growing realisation of the
impact changing political environment will mean for individual companies. There have been many recent examples, such as those in China that have helped to raise the awareness of this risk.
Whilst it is known that there is often little that an individual company may do to impact on the way in which the political environment will develop, this is an
uncontrollable macro factors for all but the largest and most influential companies, there is great value is being prepared, foretelling the way the environment may change and being prepared. Therefore,
managing political risk is often mixed in with other risk assessment tools and risk management measures. The nature of investment has always been one of risk and reward, as
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