Brink, Charlotte H. (2002-12)
Thesis (PhD)--University of Stellenbosch, 2002.
analysing and enabling the management of political risk as investment risk - a model that is both sensitive
to and reflective of the comprehensive business and investment climate in a country, not only credit or
country risk, or only pure political risk in its narrowest definition.
In reading about past and more recent research in the field of political risk analysis, it becomes clear that
many authors begin by noting the diversity and the discrepancies of the existing definitions of political
risk, but evidence in political risk insurance shows that the major perceived political risks that investors
insure their interests against seem to be confiscation, expropriation and nationalisation. In the light of this
study's findings though, a case can be put forward for urging that the conceptualisation of political risk be
extended to further include any or all of the micro political risk factors and their indicators that have been
identified to ensure that political events do not impact negatively on a foreign company's profitability.
Foreign investors put assets at risk to achieve their objectives and the assessment of these risks, including
political risks, is the key to successful operations. Opportunities and risks are often two sides of the same
coin and political risk comprises a large part of the environmental forces in terms of the management
challenges a Multinational Company (MNC) faces in any investment climate.
A firm's foreign investment strategy deals with the positioning of the organisation in an uncertain host
country environment and investment climate. This study attempts to explain how a firm's political risk
exposure, which refers to the sensitivity of a firm's projected profitability and operationability in a host
country to changes in the investment climate, could be managed and reduced. It is hoped that political
risk analysis and management can assist foreign operations in managing the risks that might have
otherwise proven to be destructive to profitability and operationability.
It is irresponsible to present a potential investor with a risk assessment that does not incorporate political
risk factors and their indicators, let alone environmental, societal and socio-economic risk factor
indicators. Ultimately any business climate, regardless of the country being studied, is underwritten by a
political system, political climate, political culture and business culture of the system in which foreign
business wishes to operate profitably.
What is often labelled as unnecessary and irrelevant detail in risk analysis often results in a lack of using
micro risk factors and their indicators and an underestimation of the importance of such micro risk
indicators. Hopefully this study takes up the challenge of showing that political risk can be managed and
political risk analysis can be made more precise - that it is possible to measure and manage political risk.
AFRIKAANSE OPSOMMING: Soos die titel van hierdie studie voorstel is een van die grootste uitdagings die ontwerp van 'n model vir
die analise van politieke risiko as beleggingsrisiko - 'n model wat ter selfde tyd sensitief is vir en
weerspieëlend van 'n land se algemeen omvattende besigheids- en beleggingsklimaat, en nie slegs suiwer
politieke risiko in die nouste sin van die woord nie.
'n Literatuurstudie van meer onlangse navorsing, asook navorsing wat in die verlede gedoen is oor
politieke risiko en die analise daarvan, dui daarop dat baie outeurs melding maak van die diversiteit en
teenstrydighede in die bestaande definisies van politieke risiko. Die teenwoordigheid van versekering
teen politieke risiko wys egter daarop dat die primêre politieke risiko's waarteen beleggers hulle belange
verseker meesal nasionalisering en onteiening is, asook die beslaglegging op beleggings. Teen die
agtergrond van hierdie studie se bevindinge, kan daar egter 'n saak uitgemaak word vir die verbreeding
van die konseptualisering van politieke risiko om enige of alle van die mikro-politieke risiko
faktorindikatore wat in hierdie studie identifiseer word in te sluit, om sodoende te verseker dat die
negatiewe gevolge wat politieke gebeure moontlik mag inhou vir 'n buitelandse maatskappy se belange,
sover moontlik beperk word.
Buitelandse beleggers stel bates bloot aan risiko's ten einde voorafgestelde doelwitte te bereik en die
assessering van hierdie risiko's, insluitende politieke risiko's, is 'n groot bydraende' faktor tot die
suksesvolle bedryf van buitelandse beleggings. Geleenthede en risiko's is dikwels twee kante van
diesIefde muntstuk en politieke risiko maak 'n groot deel uit van die uitdagende beleggingsomgewing
waarin die bestuur van 'n multinasionale korporasie (MNK) daagliks moet funksioneer.
'n Maatskappy se buitelandse beleggingstrategie handel met die posisionering van die organisasie in die
onvoorspelbare beleggingsklimaat van 'n vreemde land. Hierdie studie poog ook om te verduidelik hoe
die mate waarin 'n firma blootgestel word aan politieke risiko, met ander woorde die sensitiwiteit van 'n
firma se voorgenome winsgewendheid en bedryf teenoor veranderinge in die beleggingsklimaat van 'n
vreemde land, bestuur en verminder kan word. Daar word gehoop dat politieke risiko analise en die
bestuur daarvan 'n bydra kan lewer tot buitelandse besighede se bestuur van hierdie risiko's, wat
andersins 'n vemietgende impak kan hê op die winsgewendheid van buitelandse bedrywighede.
Dit is onverantwoordelik om aan 'n buitelandse belegger 'n risiko analise voor te lê wat nie politieke
risiko faktore en die daarmee gepaardgaande indikatore insluit nie. Die studie argumenteer verder dat
faktorindikatore wat die fisiese omgewing, sosiale asook sosio-ekonomiese faktore aanspreek ook in 'n
risiko analise ingesluit moet word. Oplaas is enige besigheidsklimaat, nieteenstaande die land wat
bestudeer word, onderskryf deur 'n politieke stelsel, politieke klimaat, politieke kultuur en
besigheidskultuur van die stelsel waarin die buitelandse besigheid winsgewende resultate as doelwit het.
Wat dikwels beskou word as onnodige en irrelevante detail in risiko analise lei dikwels tot 'n gebrek aan die insluiting van mikro-risiko faktore en hulle indikatore weens 'n onderskatting van die noodsaaklikheid
daarvan om juis sulke mikro-risiko faktorindikatore in 'n risiko analise in te bou. Hierdie studie aanvaar
hopelik die uitdaging om te wys dat politieke risiko tog bestuur kan word en dat politieke risiko analise
tog meer eksak gemaak kan word - dat dit wel moontlik is om politieke risiko te meet en bestuur.
Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/52929