Which of the following is NOT an example of political risk? Some of the political risks can be found in a company`s filings with the Securities and Exchange Commission (SEC) or in a prospectus if it is a mutual fund. Trading in emerging markets can be intimidating, which is why it`s imperative to have a detailed plan and risk mitigation strategy in place from the get-go. Internationally active companies, called multinationals, can purchase political risk insurance to eliminate or mitigate certain political risks. This allows management and investors to focus on the fundamentals of the business while knowing that losses due to political risk are avoided or limited. Typical actions that are covered are war and terrorism. While political risk is inevitable in the global market, with risk also comes a reward. These emerging markets are becoming important consumer centres with attractive opportunities for Canadian businesses. International trade can be a risky business, even in the most developed markets, at best, but Canadian exporters need to be particularly vigilant when venturing into emerging markets, where political risk may be more difficult to identify and manage. The Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, was adopted by the General Assembly in its resolution 55/25. It entered into force on 25 December 2003. It is the first legally binding international instrument with an agreed definition of trafficking in human beings.
This definition aims to facilitate the convergence of national approaches to the definition of national offences that would promote effective international cooperation in the investigation and prosecution of trafficking in human beings. Another objective of the Protocol is to protect and assist victims of trafficking in human beings with full respect for their human rights. Political risk is notoriously difficult to quantify because there are limited sample sizes or case studies when it comes to a single nation. Some political risks may be insured through international or other government agencies. The result of political risk could lower investment returns or even eliminate the ability to withdraw capital from an investment. In addition to market-driven business factors, companies are also influenced by policy decisions. Governments make a variety of decisions that can affect businesses, industries and the economy as a whole. These include taxes, spending, regulation, currency valuation, trade tariffs, labor laws such as minimum wage, and environmental regulations.
Laws, even if only proposed, can have an impact. Regulations can be established at all levels of government, including federal, state, and local levels, as well as in other countries. Political risks are unpredictable, but here`s how to create a risk management program and policies to limit the potential negative impact. So how can Canadian exporters prepare for sudden and unexpected political risks? The Protocol against the Illicit Manufacturing of and Trafficking in Firearms, Their Parts and Components and Ammunition was adopted by the General Assembly in its resolution 55/255 of 31 May 2001. It entered into force on 3 July 2005. The Protocol, the first global legally binding instrument on small arms and light weapons, aims to promote, facilitate and strengthen cooperation among States parties to prevent, combat and eradicate the illicit manufacturing of and trafficking in firearms, their parts and components and ammunition. By ratifying the Protocol, States undertake to take a number of measures to combat crime and to transpose into their domestic legal systems three sets of normative provisions: the first concerns the definition of offences related to the illicit manufacturing of and trafficking in firearms on the basis of the requirements and definitions of the Protocol; second, on a system of State authorizations or licences to ensure the licit manufacture of and trafficking in firearms; and the third on the marking and tracing of firearms. Wal-Mart Stores Inc. described certain political risks it faces in its fiscal 2015 10-K filings with the SEC in the operational risk section.
In its supplier risks, Wal-Mart cited possible political and economic instability in countries where foreign suppliers operate, labor issues, as well as foreign trade policies and tariffs that could be imposed. Political terrorism, war, civil war or other forms of political violence can damage or destroy a company`s assets and prevent it from conducting operations essential to the conduct of business. In its section on regulatory, compliance, reputational and other risks, the Company describes the risks associated with legal, judicial, regulatory and political/economic risks. Risk factors mentioned include political instability, legal and regulatory restrictions, local product safety and environmental laws, tax regulations, local labor laws, trade policies, and monetary regulations. Wal-Mart specifically mentioned Brazil and the complexity of its federal, state and local laws.