Political Risk

Political decisions have a profound effect on the risk management endeavours of businesses and organisations. These working across political boundaries expose themselves to unfamiliar regulations (e.g. the exposure to different labour laws in the growing business of outsourcing). There is risk applicable in all regions of the world.

The volatile political nature of many unstable regions warrants specialist risk management strategies. These regions/countries are not only susceptible to state and military corruption, organised crime (including hijacking and kidnap for ransom), or even regional conflicts and war, but also a number of cultural and ethnic differences. A sudden legal changes or electoral wins that are inspired by social and economic factors in any country will have a severe effect on an organisation's ability to function in that region.

For example the religious conflict in Nigeria – unstable region – is a major headache for oil companies who may need to consider sudden evacuations. Another example is the Green Party as a potential partner in coalition government in Belgium – stable region – is a headache for Formula One Motor Racing who may need to cancel another race if a stricter environmental law banning smoking is brought forward.

Political Risk factors are variable by nature, and as a result require a fluid risk management solution, which will account for the wider geopolitical, cultural, ethnic and sociological factors that impact on the future performance of businesses and organisations which is a major factor in investment decisions. Common risks to name a few include confiscation, expropriation and nationalisation; deprivation; forced abandonment; abrogation; law change, order decree or import/export restriction; property terrorism and sabotage/strikes riots and civil commotion; malicious damage; war on land; currency inconvertibility; contract repudiation; wrongful calling of guarantees.

Our approach offers continuous monitoring of political risk variables, including a technical analysis of environmental risk, supported by conflict and geopolitical analysis of impending corporate risk. We provide risk management alternatives to negate risks that help individuals, businesses and organisations that operate in political unstable environments.

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