Political Risk and the Supply Chain

Every global risk manager is finely attuned to the weather, given the potentially devastating impact Mother Nature can have on supply chains. But another kind of storm can unravel international operations—one that effects the political climate.

As this year’s events in Ukraine have vividly demonstrated, formerly stable political regimes can quickly falter and fail. Even a staunch ally like Egypt, once a safe destination for tourists, can become a questionable place to do business in an instant. Economic factors like rising interest rates in the United States can also create political and economic havoc in emerging countries that have thus far benefited from record-low borrowing rates.

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