Hedging Political Risk
Article from: OGEL 3 (2004), in Economic and Commercial Context for Oil, Gas and Energy Law
Introduction
It is hard - some would say immoral - to look beyond the human implications of political instability to its financial consequences. Nevertheless, fiduciary duty to shareholders obliges the boards of multinational corporations to do just that. What can companies with personnel and assets in risky countries do to cushion the impact of the worst case? How might such companies diversify their exposure to political risk without having to incur the upheaval and capital cost of spreading their operations across the world? The starting point is the quantification of such risk. After ...