Political risk is the risk that arises out of uncertainty and instability within the government framework or political institutions in a country. To know more about it, refer to the following article: https://efinancemanagement.com/investment-decisions/political-risk

1. Political Risk
By:-
eFinanceManagement.com
https://efinancemanagement.com/investment-decisions/political-risk

2. Content
1. Meaning
2. Impact of Political Risk
3. How can we Avoid or Manage Political Risk?
4. Reference

3. • Political risk is the risk that arises out of uncertainty and instability within
the government framework or political institutions in a country.
• It is critical for a country to provide a stable political environment to
retain and attract more business to the economy.
Meaning

4. Political instability is one of the major reasons for:
Fall in equity prices and stock market crashes in any country.
Fall in the value of a country’s currency in the international market.
Widespread protests, unemployment, corruption, and other social evils.
Widening gap between the rich and the poor and unstable operating
conditions for the businesses.
Spiral-like situation with falling growth rate, falling production and sales,
falling foreign investment and equity markets, falling exports, and can
lead to deflation and even recession.
Impact of Political Risk

5. • Avoid investing in countries with political turbulence or future political
uncertainty.
• Pull out investments slowly from such countries.
• Go “local” with what one manufactures or trades.
• Look for local investors and the government for finance.
• Investors also have an option to get insurance against political risk in a
country.
How can we Avoid or Manage Political
Risk?

6. To know more about it, refer to the following article:
Political Risk
Reference