Political risk is simply a part of participating in business, but it becomes a factor you cannot ignore if your business has international projects. When working in multiple countries, you’re also working under multiple governments, which means there are more opportunities for political decisions and events to result in revenue loss or even in the failure of your project..
While you can’t avoid political risk, you can certainly take steps to be prepared for it. The first of these steps is to conduct a political risk analysis well before taking on any project, such as a global IT deployment.
What is a political risk analysis and why is it important?
A political risk analysis involves looking at the world as a whole, and more specifically the countries you’ll be working in, to determine and predict coming political developments that could impact business decisions. When your team or someone you work with completes this analysis, you’re able to make informed, educated decisions based on strong predictions about what is coming.
There will always be some events that are unpredictable, but a political risk analysis can help your company be confident in the decisions it makes. Social science knowledge plays strongly into this analysis, and analysts use many different methodologies to provide insight into the coming changes in the political sphere. This tactic gives businesses the opportunity to make any necessary adjustments to keep their business running smoothly.
How can I assess the political risks of international business?
Businesses and managed service providers often ask themselves this question before doing business with another country. The easiest way is to partner with a company that has extensive experience in your target market or offers political risk analysis services.
If you’d like to do the analysis yourself, begin by studying the current political climate of the country where you’ll be working throughout your global IT deployment. Who is currently in power? What are the present labor laws? Look into taxation, trade barriers and economics. Find out as much as you can about the politics of today.
Then, look into the country’s recent history. See if you can see trends in terms of political parties, legislation, and political changes. Does this country have a history of political unrest, turmoil, or upheaval? Is the party currently in power poised to be uprooted in the near future?
Now that you’ve done the background work, it’s time to look into the future and make predictions. Based on the current status of the country and its past history, what appears likely to happen in the weeks, months, and years to come. Are political commentators speculating on major legislative changes coming soon? Do current events articles talk about amendments coming to the tax code? Find and analyze a number of different current events or even opinion pieces that talk about the future of the country. Remember to look at sources from different points of view, if you’re looking at opinion pieces.
Finally, you will need to draw conclusions about how any foreseen unrest will impact your project. How will it affect the labor market? Will there be new taxes or fees that could skyrocket your costs? Could travel restrictions prevent your labor force from even being able to show up?
Find a Global Partner
Understanding the political situation for your global projects requires a constant updating of your knowledge of international affairs. You can avoid much of this headache by working with a partner who is actively involved in the country you’ll be working in with your global IT deployment. There is simply no replicating the inside knowledge they have by working with local techs. Kinettix has technicians and teams in over 90 countries worldwide.
Working with us gives you a partner as you navigate the challenges of working internationally. Not only do we have a business presence in countries across the world, but we know our teams who live and work there. We have years of experience working internationally, and we’d like to share what we’ve learned with you. Ready to get started? Give us a call today.