Chapter 16: Country Risk Analysis

A series of vocabulary flashcards derived from the Country Risk Analysis lecture notes.

Country Risk Analysis

The examination of potentially adverse impacts of a country's environment on an MNC’s cash flows.

Political Risk

The risk of loss when the host government either takes over the company or enacts laws that adversely affect business.

Financial Risk

Potential financial losses resulting from changes in the economic environment, including interest rates, exchange rates, and inflation.

Direct Foreign Investment (DFI)

Investment made by a firm or individual in one country in business interests in another country.

Corruption Perceptions Index

A composite index measuring the perceived levels of public sector corruption worldwide, on a scale from 0 (highly corrupt) to 100 (very clean).

Macro-assessment

An overall risk assessment of a country considering all variables that affect country risk except those that are firm-specific.

Micro-assessment

An assessment of a country related to the MNC’s specific business operations and risks.

Checklist Approach

A method of assessing country risk by making judgments about all political and financial factors and assigning numerical ratings.

Delphi Technique

A method of collecting independent opinions without group discussion to assess risks.

Exchange Rate Risk

The risk of losing money due to unfavorable changes in the exchange rate between currencies.

Currency Inconvertibility

The inability to convert a country's currency into foreign exchange, which can affect MNCs' operations.

Host Government Takeover

The event where a government acquires control of a foreign company operating within its borders.