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 refer to changes in laws and regulations, which are typically decided by the government. Therefore, the risk created by these actions is political risk, which refers to the risk of negative impact on the company's operations and investments caused by political decisions or events in a host country. In this case, the frequent and dramatic changes in labor laws in Country Z could result in increased costs, disruption of business operations, or even the loss of investments for Schlamp & Co.