BROWSE

Macro Risk

What is 'Macro Risk'

A type of political risk in which political actions in a host country can adversely affect all foreign operations. Macro risk can come about from events that may or may not be in the reigning government's control.

Explaining 'Macro Risk'

For example, any company that is engaging in foreign direct investment in a country that is on the verge of switching to an anti-foreigner slanted government would be facing tremendous macro risk, because the government is likely to expropriate any and all foreign operations, regardless of industry.

There are many organizations that provide reports and information on the degree of political risk that a country may possess. Furthermore, companies have the opportunity to purchase political risk insurance from a variety of organizations in order to mitigate potential losses.


Further Reading


Macro risk premium and intermediary balance sheet quantities
link.springer.com [PDF]
… as measured by the availability of equity capital and the measured risks associated with … the financial sectors that do best in predicting the change in the macro risk premium are … are significant: increasing balance sheets are associated with lower effective risk aversion, higher …

Managing risk using macro-financial risk analysisManaging risk using macro-financial risk analysis
patents.google.com [PDF]
… as measured by the availability of equity capital and the measured risks associated with … the financial sectors that do best in predicting the change in the macro risk premium are … are significant: increasing balance sheets are associated with lower effective risk aversion, higher …

When micro prudence increases macro risk: The destabilizing effects of financial innovation, leverage, and diversificationWhen micro prudence increases macro risk: The destabilizing effects of financial innovation, leverage, and diversification
pubsonline.informs.org [PDF]
… as measured by the availability of equity capital and the measured risks associated with … the financial sectors that do best in predicting the change in the macro risk premium are … are significant: increasing balance sheets are associated with lower effective risk aversion, higher …

Accounting for macro-finance trends: Market power, intangibles, and risk premiaAccounting for macro-finance trends: Market power, intangibles, and risk premia
www.nber.org [PDF]
… as measured by the availability of equity capital and the measured risks associated with … the financial sectors that do best in predicting the change in the macro risk premium are … are significant: increasing balance sheets are associated with lower effective risk aversion, higher …

Why Gaussian macro-finance term structure models are (nearly) unconstrained factor-VARsWhy Gaussian macro-finance term structure models are (nearly) unconstrained factor-VARs
www.sciencedirect.com [PDF]
… as measured by the availability of equity capital and the measured risks associated with … the financial sectors that do best in predicting the change in the macro risk premium are … are significant: increasing balance sheets are associated with lower effective risk aversion, higher …

Variable rare disasters: A tractable theory of ten puzzles in macro-financeVariable rare disasters: A tractable theory of ten puzzles in macro-finance
pubs.aeaweb.org [PDF]
… as measured by the availability of equity capital and the measured risks associated with … the financial sectors that do best in predicting the change in the macro risk premium are … are significant: increasing balance sheets are associated with lower effective risk aversion, higher …

Macro-financial vulnerabilities and future financial stress-Assessing systemic risks and predicting systemic eventsMacro-financial vulnerabilities and future financial stress-Assessing systemic risks and predicting systemic events
papers.ssrn.com [PDF]
… as measured by the availability of equity capital and the measured risks associated with … the financial sectors that do best in predicting the change in the macro risk premium are … are significant: increasing balance sheets are associated with lower effective risk aversion, higher …

Variable rare disasters: An exactly solved framework for ten puzzles in macro-financeVariable rare disasters: An exactly solved framework for ten puzzles in macro-finance
academic.oup.com [PDF]
… as measured by the availability of equity capital and the measured risks associated with … the financial sectors that do best in predicting the change in the macro risk premium are … are significant: increasing balance sheets are associated with lower effective risk aversion, higher …



Q&A About Macro Risk


Where can you find information on the degree of political risk that a country may possess?

You can find this information from organizations such as the World Bank and Moody's.

What is macroeconomics?

Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole.

What are some examples of macro risks?

Some examples include expropriation, nationalization, and currency devaluation.

What does "political actions" mean in this context?

Political actions refers to government policies or decisions made by the current ruling party or parties.

Who studies macroeconomics?

Economists who specialize in this area are called "macroeconomists".

How do companies mitigate potential losses from macro risks?

Companies purchase political risk insurance from various organizations to mitigate potential losses.

What does macroeconomists study?

Macroeconomists study topics such as gross domestic product (GDP), unemployment rates, national income, price indices, output, consumption, unemployment, inflation, saving and investment.

What is macro risk?

Macro risk is a type of political risk in which political actions in a host country can adversely affect all foreign operations.