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MANAGEMENT OF COUNTRY
RISK
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INTRODUCTION
Unanticipated changes in business condition
Wide variety of risks in country and across the glob
Spreading risk by set-up of new projects
Financial risks and Political risks
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NATURE OF COUNTRY RISK
Macro risks
-country level
-global level
Micro risks
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KINDS OF COUNTRY RISK
Political Risk
-transfer risk
-operational risk
-control risk
Financial Risk
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POLITICAL RISK FACTORS
Political stability
Philosophy and ideology of political parties
Integration into the world system
Ethnic and religious stability
Attitude of host country consumers
Expropriation
Disruptions in operations
Blockage of funds
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Contd..
Loss of intellectual property right
Economic source of political risk
Corruption
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FINANCIAL RISK FACTORS
Current and potential economic health of the
host country
Financial state of the host country
Monetary and fiscal policies of the host
country
Splurging by government
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ANALYSING COUNTRY RISK
Macro perspective
Micro perspective
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COUNTRY RISK ASSESSMENT TECHNIQUES
Checklist approach
Delphi technique
Statistical techniques
Spot visits
Combination of techniques
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MEASURES TO MINIMISE COUNTRY RISK
Pre-investment stage
i. Avoidance
ii. Insurance
iii. Negotiating the investment environment
iv. Structuring the investment
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Operating policies
i. Planned disinvestment
ii. Short term profit maximisation
iii. Measures to reduce risk of post operation
expropriation
iv. Adaptation
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References
International Business Management, F.L. Bascunan,
Global Vision Publishing House, 2011
Multinational Financial Management, R.M.
Srivastava, Excel Books, 2008
