Schlamp & Co.is considering building a manufacturing facility in Country Z,which has changed it labor laws frequently and dramatically in the past decade. What kind of risk is created by these legislative actions?

Question

Quizplus · Accepted Answer

Legislative actions are related to the political environment of a country, and frequent and dramatic changes in labor laws could signal instability in the political environment. This creates political risk for companies considering investing in that country. Political risk refers to the potential losses that a company might face due to political changes, instability, or uncertainty in a foreign country.