Literature to Quantify Political Risk

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I. The concept of political risk * Definition of political risk * Sources of political risk II. Management of political risk A. Assessment of political risk * Subjective approach’s * Grand tours * Old hands * Delphi techniques * Objective approach’s * multivariate analysis MVA * Political risk indicators * General risk indicators * Partial risk indicators B. Monitoring political risk * Bayes’s rule C. Integrating political risk in international capital budgeting * The approach of Shapiro (adjusting cash flows) * The approach of Clark Ephraim * The approach of Mahajan The concept of political risk Studies of the evolution of corporate finance suggests that international companies started to focus on dealing with many kinds of risks including political risk since before the first world war, the concept of political risk has passed through some developing phases as a consequence of witnessing many political events as Expropriation and nationalization, political instability, summing up those phases as follows: -1960’s “the period of banalization of political risk” Just not paying to much attention on clarifying or determining the probable risk -1970’s “the period of consciousness” Main sources of political risk where motivated by ideological views; nationalism and Marxism -1980’s “the period of scientification and professionalization” The birth of the quantitative risk assessment methods the probabilistic interpretation of political risk and the systematic use of these quantitative approaches -1990’s “the period of scientific refinement” The contribution of other fields of research; political science, sociology, decision theory, etc... Definition of political risk Though political risk has not received a clear cut definition one simple definition is the

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