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 …


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