intercontinental financial administration

 international economical management Article

Unit doze

Country Risk Analysis


12. you Caselet

doze. 2 Introduction


doze. 3 Country Risk Factors

12. 5 Assessment of Risk Factors

12. five Techniques to Examine Country Risk

12. 6 Measuring Region Risk

doze. 7 Governance of Country Risk Analysis

12. almost eight Case Study

doze. 9 Brief summary

12. 15 Glossary

doze. 11 Port Questions

12. 12 Answers


doze. 1 Caselet

Q3 economic situation is found damaging by fund executives Research has put forward that most from the senior financing executives happen to be of the view that the macro-economic conditions of any country are likely to remain " unchanged” or " unfavourable” in the July-September quarter. The Dun and Bradstreet India CFO survey states that in comparison to the prior quarter, the optimism level for the entire macroeconomic circumstances has gone down in the third quarter of 2012. This is mainly because of difficult domestic and also international economical conditions. It really is considered simply by around 73 per cent with the surveyed CFOs that the general macro-economic conditions during Q3 2012 will be unfavourable or will remain unrevised. There is a rise of around 24 % from Q2 2012, hence expressing a weak organization sentiment.

The chief operating police officer of Gloomy & Bradstreet India declared the overall CFO optimism level has even more declined during Q3 2012 due to hard domestic circumstances in addition to the continuous worries regarding the Western debt problems weigh in overall self confidence.

International Economic Management

Product 12

The increasing concerns related to equally global and domestic economy have led to an increasing focus on risk management tools for the coming six months. Around 82 % are in the opinion that the level of economical risk around the company's "balance sheet" will either increase or will remain regular in Q3 2012.

" A large number of CFOs continue to remain focused on Risikomanagement as a important priority region and employing risk mitigation measures that will allow them to minimize the impact of the risky economic and political environment on the business balance sheet, ” he explained.

Source: Modified from finance-executives-find-q3-economic-situation-unfavourable_57536. code Accessed about 12 August 2012

doze. 2 Advantages

In the previous unit, you discovered about the international capital structure, exactly where concepts such as cost of capital and capital structure of MNCs were discussed. Additionally you understood the right way to describe the expense of capital in international business context.

Now that you understand the idea of the capital structure of an MNC, you might want to find the assets of your company, to get monetary benefits, which lies outside your domestic market. For this you should use foreign exchange. When you use foreign currency, you are subjecting you to two types of risks – country risk and foreign exchange risk. Nation risk may be the risk of purchasing a country, where a change in the organization environment may possibly adversely impact the profits or perhaps the value of the assets within a specific country. For example , economical factors including devaluation or stability factors such as a civil war may possibly jeopardize the investment. Therefore we need to understand the theory behind country risk before we are able to think about making an investment abroad.

From this unit, you will see about nation risk analysis. You will also analyze the country risk factors plus the assessment of risk factors. The unit likewise presents a detailed description from the techniques whereby the country risks can be assessed as well as tested. You will also find out about incorporating risk in capital budgeting, governance of nation risk assessment and protecting against host authorities takeovers.

Sikkim Manipal University or college

Page No . 240

Foreign Financial Administration

Unit 12


Following studying this kind of unit, you should be able to:

• define nation risk and assess the risk factors

• explain the techniques of...

References: • Kaur, Dr . Harmeet. International Financial Administration. Delhi: Vikas


• Kumar, Neelesh. International Financial Management. Delhi: Vikas


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