Political Risk and Strategic Outlook

Mr Saptarshi Ghosh

The course will provide a foundation to understanding and explaining political risk as a key ingredient for global businesses by considering theory, the role of history, politics and economics, as well as institutions, markets and nation states. The fall of the Berlin Wall and the collapse of the Soviet Union ushered in a long period of unipolarity and, with it, relative prosperity and stability in the developed world. Political risk was largely looked at by businesses in terms of identification and categorisation of risks in emerging economies based on quantitative models that primarily relied on aggregate denominators.

However, recent developments across both the developed and emerging world like the 2007-2008 Financial Crisis, the European Union Sovereign Debt Crisis, maritime tension in the South China Sea, the rise of China, Brexit, Trump’s election victory, the civil war and refugee crisis in Syria, issues of proliferation by aspirational nuclear states like Iran and North Korea, to name a few, have radically transformed the political landscape across the world. They have severely exposed the limitations of a one-size-fits-all quantitative approach to identification and assessment of political risk by global businesses. Political risk is back on the agenda and global businesses have begun investing in their risk mitigation capabilities and recalibrating their strategic outlook.

The course examines political risk in an inter-disciplinary context and confronts the strategic issues, challenges, assumptions and priorities of global businesses against a series of core cases. Some of the key topics that the module discusses are security risk arising from prolonged regional conflict or threat of conflict, political risk emanating from closed political systems, the rise of nationalism and protectionism in the US, and, risks arising from business investments into and out of nation states. It will identify and discuss the various ways of strategic reorientation by global businesses to navigate through and mitigate political risks using academic and policy-relevant literature, recent cases, class-room based simulation exercises and scenario planning. Module delivery will focus on being interactive, participatory and industry-specific.

Intended Audience

The module is aimed at students from all backgrounds who are interested in international business and/or in international relations. It provides a critical understanding and analysis of political risk and aims to improve the quality of strategic decision-making.

Previous Knowledge

Though no requirement of previous political risk, political economy, international security or politics/IR background is necessary, it would be helpful to read widely on the above topics.

Transferable Knowledge and Skills

  • Understand the nature and locate evolution of political risks, including points of inflection in the evolution of fat tail risks and potential escalation into crises.
  • Identify issues and problems in devising strategies by global businesses to mitigate political risk by timely identification of such points of inflection using Blind Spot Analysis.
  • Enhance capacities to evaluate and assess corporate strategies in mitigating political risk using a wide range of tools, techniques and strategic paradigms.
  • Develop critical understanding and application of qualitative methods such as Gladwin-Walter Analytical Framework, the Bow-Tie Analytical Framework, Trend and Uncertainty Analysis, etc, to identify fat-tail political risks and possible escalation into crises through a combination of classroom-based real-time simulation exercises, debates and group discussions.
  • Undertake original and independent research on issues related to political risk and corporate strategy based on qualitative analytical tools and frameworks used by consultancies and global businesses.