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Country Risk

Country Risk. Country Risk Definition. The Likelihood that unexpected events within a host country will influence a client’s or a government’s ability to repay a loan or make a payment Sovereign Risk/Political Risk Unilateral repudiation of foreign obligations Economic Risk

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Country Risk

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  1. Country Risk

  2. Country RiskDefinition • The Likelihood that unexpected events within a host country will influence a client’s or a government’s ability to repay a loan or make a payment • Sovereign Risk/Political Risk Unilateral repudiation of foreign obligations • Economic Risk Inability to pay

  3. Political Risk • Firm Specific - governance issues - business risks - industry - goal conflicts

  4. Political Risk • Handling Firm Specific Risk - Investment agreement * funds flows * transfer prices * export licences * tax * access to markets

  5. Political Risk • Handling Firm Specific Risk - Insurance * government * private

  6. Political Risk • Handling Firm Specific Risk - Operating Strategies * local sourcing * location * transportation * technology * markets (brand name) * finance (thin equity, multi source)

  7. Political Risk • Country Specific Risk - Blocked Funds/ Transfer Risk * other fees * transfer pricing * leading and lagging * fronting loans * other unrelated exports

  8. Political Risk • Country Specific Risk - Cultural and Institutional Risk * ownership structure * human resource norms * religion * nepotism and corruption * intellectual property rights * protectionism

  9. Political Risk • Global Specific Risk - Terrorism - Anti-globalisation - Environmental Concerns

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