Introduction

The relevance of political risk derives in part from the fact that it arises from the interaction of two very different domains. First, a business exists to create profit for itself and its stakeholders, and business managers and investors across all sectors share a very specific language and mindset oriented around these objectives. Market share, growth, margin, and return on investment predominate in business thinking. Second, the political realm is pervasive. A third point of relevance is that the stakes are far higher in politics than business. Political risk, then, is relevant because it is challenging for businesses to understand, it is inescapable when dealing with developing countries, and it is uniquely hazardous. Political risk management is a key factor for success in emerging markets, and a key enabler of international growth. The chapter also presents an overview on the key concepts discussed in this book.