Should Political Risk Management Be an Active Strategy?

Should Political Risk Management Be an Active Strategy?

What is your recommendation for any firm? Does your firm have a political risk management strategy?

Political risk is the danger that political decisions or measures will have a negative effect on one's business. Political risk mainly affects firms doing business in multiple countries, or operating in countries other than their own. Political risks can range from combat, war and revolution to corruption, fraud and changes in tax laws. Managing political risk involves researching potential risks beforehand, taking stages to diminish or minimize risk and ensuring you have legal option.

Every African country should have a corporate of experts in international marketing, to form association like American Marketing Association. This system of African experts will work in partnership with association of other developed and developing countries. Such groups of professionals will raise the importance of international marketing to domestic firms, trade related-decision makers, government bodies or organization like Economic Community of West African States. (ECOWAS). Such home-based marketing experts could help foreign investors understand the African context, by leading them to generate local treasure or wealth and support local economy.

To guard themselves from changes in worldwide environment, firm should repeatedly monitor the political circumstances in the countries in which they operate by consulting with local work, embassy officials, and, where appropriate, firms specializing in political risks management.

The examining system should be built up on some political risks signs and determinants. All the international marketing department of any firms should elaborate its specific standards of political stability favorable to foreign investments.

Another option for African nations is to follow the United States. For instance, United States uses to negotiate bilateral treaties to protect its firm from random actions by host country governments. This is a government- to- government negotiation. These treaties require the host country to agree to decide investment clashes involving host country and citizens of other country. Inversely, the agreements can ask the country of the foreign firms to keep host country rules and be blamable for any cost they may cause to the present country.

Some degree of political risk exists in every country, although the importance or nature of these threats may differ. In political risks assessment, as in most business decisions, it is a matter of harmonizing risks rewards. West African is confronted with many political confusions, but the market potential is still high. International marketing is a one of the support of world peace, as international relations are. So invest in a risky nations that could yield peace that will increase profits.