August 16, 2010

Political Risk and Globalization

Since you are planning to venture into the international market, there are a couple of things you need to take in consideration and the most overlooked factor is political risk. In the United States, the Overseas Private Investment Corporation (OPIC) offers small businesses the security to export to other countries by means of political risk insurance. Basically, this gives you the assurance that your financial investments are secured. However, there are other aspects interlaced with political risk and globalization. One of which is your personal safety and those of your employees.

For example, you are well on your way in expanding your business to a different country. You have done your research and you chose a country which is less risky in terms of politics. However, because of some unprecedented circumstances, the country that you chose encountered upheavals and some political changes were made. This may alter your expected outcome of the business. Now since you have financial insurance because of the OPIC, you are more or less comforted. But then, you have to take into consideration the complications such as terrorism, riots, political coups, civil wars and insurrection to your own life and the lives of your employees.

Before getting into the international scene, you have to be prepared especially when it comes to political risks since it affects the strategic, financial and personnel facets of your business. You have to be prudent when it comes to globalization not only because your finances might suffer but also because your most important asset, your people, can be put into jeopardy.

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