Assessing international business risk is critical to every multinational enterprise (MNE) when it plans to invest overseas. Such risk assessment has grown in importance as more firms' overall success relies upon their risk-adjusted net returns in foreign operations. Unexpected political events (e.g. terrorism) and abrupt changes in regulatory schemes reinforce the necessity of risk assessment in international business. Continuous opening up of emerging economies provides MNEs with many new opportunities but at the same time solidifies international business risk. The importance of political risk creates demand for its assessment. The various ways to measure the risk can be roughly classified into two categories: (1) qualitative approaches and (2) quantitative techniques that result in political risk indices.
Keywords: political risk; international business; multinational enterprise; risk assessment; foreign operations; regulatory schemes
Article. 10114 words.
Subjects: International Business ; Business Strategy
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