An increase in political risk can be managed by:

Question

Quizplus · Accepted Answer

All three options can be effective in managing an increase in political risk. Adjusting the NPV of the investment project by reducing expected cash flows or increasing the cost of capital can mitigate potential losses from political instability. Forming a joint venture with a local company can provide more insider knowledge and connections in the local market, helping to navigate any political obstacles. Purchasing political risk insurance can also offer protection against potential losses. Using a combination of these strategies may be the most effective approach.

An Increase in Political Risk Can Be Managed By