Political risk management as corporate responsibility

Abstract

The staggering number of specialized reports published by leading consulting firms and research groups clearly demonstrates that political risk is a factor widely followed by international business community. Nevertheless, as paradoxical as it may seem, in spite of the general awareness to political risk, only few companies are actually monitoring and managing it on a regular basis. Most corporations limit themselves to publicly available data provided by mainstream media or consulting firms and follow the ready-made generic recommendations issued by bodies such as national and international regulators, major think tanks, and specialized unions. Recent events in Ukraine, Middle East and Africa, though, show that political factors are being more than ever crucial to international business and accentuate the problematic of integrated corporate political risk management. Present paper analyses several notorious manifestations of political risk which took place in the last years. It particularly focuses on the chain effect of the losses and damages these risks have caused to various actors, including but not limited to business entities. Our main goal consists in demonstrating that political risk management must become a part of every firm’s responsibility as international mitigation programs and government surveillance alone become insufficient measures to maintain the security standards in the global perspective.