Political risk is easier to protect as compared to exchange rate risk.

Question

Quizplus · Accepted Answer

Protecting against political risk is more difficult than protecting against exchange rate risk because political risk is influenced by factors beyond an individual's control such as changes in government policies, regulations, or social unrest, while exchange rate risk can be managed through hedging techniques such as forward contracts, options or currency swaps.

Political Risk Is Easier to Protect as Compared to Exchange