Maintain Political Risk Management

Author(s):  
Ralph L. Kliem
Author(s):  
Ye. Bolotina ◽  
◽  
O. Shubna ◽  
A. Borodai ◽  
N. Steshenko ◽  
...  

The article considers the specifics of the functioning of TNCs, their current activities in the investment market. TNCs are currently one of the most important actors in international economic relations. The investment activity of transnational corporations has a direct impact on the balance of payments, production volumes, foreign trade turnover, employment, and the competitiveness of the host economy. The key features of political risk management of TNCs are identified and characterized. The political risks of TNCs are related to their interpretation, classification and methods. The means of reducing the degree of risk include: risk avoidance, retention, risk transfer. Ways to reduce the degree of risk include: diversification, acquisition of additional information, limitation, insurance, hedging. It has been proven that the main advantage of risk communications as an effective ancillary way to manage the political risks of TNCs at the state level, especially in the early stages of public policy making, is that it allows decision makers to better and timely inform stakeholders about risks. and to effectively exchange data between different parts of the public administration system, including effective mitigation measures. The main directions for TNC investment in 2018 are analyzed. The negative consequences of TNCs and ways to overcome them are identified.


2012 ◽  
Vol 13 (1) ◽  
pp. 85-119 ◽  
Author(s):  
Geoffrey Jones ◽  
Christina Lubinski

This article is concerned with business strategies of political risk management during the twentieth century. It focuses especially on Beiersdorf, a pharmaceutical and skin care company in Germany. During World War I, the expropriation of its brands and trademarks revealed its vulnerability to political risk. Following the advent of the Nazi regime in 1933, the largely Jewish owned and managed company faced a uniquely challenging combination of home and host country political risk. This article reviews the company's responses to these adverse circumstances, challenging the prevailing literature that interprets so-called “cloaking” activities as one element of businesses' cooperation with the Nazis. We also depart from the previous literature in assessing the outcomes of the company's strategies after 1945 and examine the challenges and costs faced by the company in recovering the ownership of its brands. While the management of distance became much easier over the course of the twentieth century because of communications improvements, this article shows that the management of governments and political risk grew sharply.


Author(s):  
Paul Rose

This chapter discusses sovereign wealth fund (SWF) governance as a tool to manage domestic political risk. It adds to the literature on the domestic legitimacy of SWFs and theorizes that legitimacy, broadly conceived, serves as a signal of appropriate entity and political risk management. Sovereign fund legitimacy is a question of increasing importance to sponsor countries as decreasing oil and gas prices force some governments to decide whether the role of SWFs should be changed to deal with the loss of revenue resulting from decreased oil and gas exports, or other budget shocks. Policymakers and fund officials must structure and govern sovereign funds in such a way as to adequately and legitimately fulfill their mandate. Threats to legitimacy include issues involving ultimate ownership of the fund, corruption, unclear or shifting purposes and uses of the fund, and misalignment of the fund with societal mores and interests.


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