Political Risks,

Economic Risks,
and Corruption
CHAPTER 6
ECONOMIC RISKS

It is the risks that economic

problems or mismanagement in a
given country will have a
meaningful negative impact on the
conduct of business in that country.

Chapter 6-3 2
POLITICAL RISKS

It is the likelihood that political forces

will cause drastic changes in a
country’s business environment that
adversely affect the profit and other
goals of a particular business
enterprise.

Chapter 6-3 3
 4

Chapter 6-3
 A political risk that only affects a certain
MICROPOLITICAL
industry or set of firms in a given
RISK
country.

Chapter 6-3 5
 This is an analysis that is directed
towards government policies and
MACROPOLITICAL
decisions that influence selected sectors
RISK
of the economy or specific foreign
businesses in the country.

Chapter 6-3 6
 TERRORISM

It involves unlawful acts of violence

threatening the physical safety of
others

Chapter 6-3 7
 TERRORISM RISK
INSURANCE ACT
OF 2002

A U.S law that after a certain

deductible provide U.S businesses
government insurance coverage for
the risk of terrorism

Chapter 6-3 8
 Somalia Afghanistan Iraq

MOST
DANGEROUS Syria Yemen Sudan

COUNTRIES IN
THE WORLD - Hati Zimbabwe Honduras
2003
Nigeria

Chapter 6-3 9
OVERSEAS PRIVATE
INVESTMENT
CORPORATION (OPIC)

A U.S government agency that sells

political risk insurance to U.S
businesses operating in countries
with which the United States has a
bilateral investment treaty.

Chapter 6-3 10
 CORRUPTION
A situation where businesses are able
to illegally after relevant private
and/or public decision making by
way of bribes, kickbacks, blackmail,
extortion and related activities.

Chapter 6-3 11
 PRIVATE
CORRUPTION

Business corruption involving other

private businesses, individuals, or
groups.

Chapter 6-3 12
 PUBLIC
CORRUPTION
The practice of making illegal
payments to government officials or
engaging in blackmail, extortion, or
other related activities in order to
obtain government contracts or
governmental approval for business
activities.
Chapter 6-3 13
FOREIGN CORRUPT
PRACTICES ACT
A U.S law that prohibits U.S
companies from bribing or otherwise
corrupting foreign government
officials in order to win foreign
government contracts or obtain
other foreign government assistance
for their businesses.
Chapter 6-3 14
THANK
YOU
Chapter 6

Chapter 6-3