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    Mitigating Risk

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    Visit the website, http://www3.ambest.com/ratings/cr/crisk.aspx hosted by A.M. Best. Examine the risk report of five different countries on at least 3 different continents. Discuss the different sources of risk in these countries and how these risks will impact different things such as the country's exchange rate, your ability to conduct business and borrow in the country, etc. As the manager of an international firm, how would you respond to mitigate these risks? Defend your answers in a 750 to 1,000 word report and cite your sources.

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    Solution Preview

    Mitigating Risk
    South Africa
    South Africa is a CRT-3 country which means that there is moderate economic, political and financial risk. South Africa is an emerging country in Sub-Saharan Africa where majority of countries have CRT-5 risk profile with the exception of Mauritius at CRT-4. The country faces economic risk from oil prices, natural resources and infrastructure. The region suffers mainly because of high levels of poverty, income inequality, corruption, exchange rate volatility, high inflation rates, high unemployment rate, high crime rate and ineffectual government institutions. Investor confidence has been negatively impacted because of increased attacks from organizations like Al-Qaeda and Boko Haram. Frequent labor unrest and energy shortages create manufacturing uncertainty because of which investors are averse to blocking their investment in South Africa.
    Romania, an Eastern European country stands at CRT-4 risk.
    Romania faces risk from bureaucracy, an inefficient judiciary with low level of corruption. The regulatory environment again poses risk for integration of the country into global markets through European markets. Economic risk is also high for the region because of disagreements over fuel subsidies and fiscal policies.
    It may be easy to obtain funds from the country given that banking system maintains adequate capital and liquidity. However it may be ...

    Solution Summary

    Overview of risks in five countries- Italy, South Africa, Romania, Pakistan and Canada and recommendations for mitigating risks.