Classes of Political Risk. Types

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Annalisa Cordoba
Manager, Spain

Classes of Political Risk. Types

There turn out to be no less than 10 types of political risk. I stumbled on this useful list and thought I'd share it since this is a risk management forum.

1. GEOPOLITICS Interstate wars, great power shifts, multilateral economic sanctions, and interventions
2. INTERNAL CONFLICT Social unrest, ethnic violence, migration, nationalism, separatism, federalism, civil wars, coups, and revolutions
3. LAWS, REGULATIONS, POLICIES Changes in foreign ownership rules, taxation, environmental regulations, and national laws
4. BREACHES OF CONTRACT Government reneging on contracts, including expropriations and politically motivated credit defaults
5. CORRUPTION Discriminatory taxation and systemic bribery
6. EXTRATERRITORIAL REACH Unilateral sanctions and criminal investigations and prosecutions
7. NATURAL RESOURCE MANIPULATION Politically motivated changes to the supplies of energy and rare earth minerals
8. SOCIAL ACTIVISM Events or opinions that go viral, facilitating collective action
9. TERRORISM Politically motivated threats or violence against persons and property
10. CYBERTHREATS Theft or destruction of intellectual property; espionage; extortion; and massive disruption of companies, industries, governments, and societies

Source: Condoleezza Rice and Amy Zeggart, "Managing 21st-Century Political Risk: Today's Threats are More Complicated, But the Remedies Don't Have to Be.", HBR May-June 2018, pp. 130-138.

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