Political Risk is the possibility that political events in a particular country will have an influence on the economic well-being of firms in that country. The political risks can be defined by classifying them on three levels; namely, (1) firm-specific risks, also known as micro risks, are those that affect the MNE at the project or corporate level, (2) country-specific risks, also known as macro risks, are those risks that also affect the MNE at the project or corporate level but originate at the country level, or (3) global-specific risks are those risks that affect the MNE at the project or corporate level but originate at the global level.
Definition