Identification and Management of Political Risk in Export-Import Activity
Identification and Management of Political Risk in Export-Import Activity

Summary/Abstract: Political risk is part of a wider range of risks arising from the course of export-import activity. Identification and assessment of political risk is a key process to take steps that will allow to limit what seems to be a crucial issue for effective operations in foreign markets. Considering the source of political risk, it can be concluded that it can occur anywhere and at any time. That is why raising awareness about the nature of political risk and possible tools to manage it is justified and extremely desirable. The aim of the study is to clarify the essence of political risk, its causes, practical examples, as well as ways of limiting it. As the root causes of political risk are: internal and external conflicts, underdevelopment and political structures – the institutional state and changes in government policies. The scope of the impact of political risk shows its three basic types: transfer risk, expropriation risk and ongoing business risk. The article presents selected political risk management practices. The research methods used in this article involve analysis and synthesis of secondary sources concerning this problem and its ‘exemplification through short case studies.

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