Posted: September 20th, 2022

Special attention is given to human rights violations, and how conducting business in these high-risk contexts has a greater chance of contributing to abuses of human rights as business relationships are built in the midst of the conflict.

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Please respond to the post below. Agree or disagree. Minimum 100 words.
Clerc
Sep 11, 2022Sep 11 at 2:30pm
External Environments / Risk / Global Trade and Investment: Causes of Risk
Key Term and Why You Are Interested in It
I have chosen to focus my discussion on Causes of Risk and how these can have an impact on global business. As someone who has traveled overseas to Europe and Southeast Asia, I have had the opportunity to see firsthand how different risk factors can affect businesses, consumers, and ultimately entire nations and their neighbors. Things such as violence caused by conflict, corrupt governments, and other relates issues pose a threat to international business operations, and are important considerations for anyone attempting to expand their company to an overseas market. My travel to these nations was primarily before college, so it is intriguing to look back and recall all of the small factors that I noticed prior to even learning about international business concepts.
In addition, I interned over this past summer with Samaritan’s Purse International Relief in their international headquarters based in Boone, NC. I saw firsthand how conflicts within nations can impact the operations on the ground. I worked with people who went overseas for a number of weeks this summer and who had to be hidden in the back of a vehicle because of gunfire, evacuated from nations due to civil war, and experienced how certain conflicts can affect what my team was attempting to accomplish with gospel-centered international relief efforts. Now, reading about causes of risk and the potential impact on international businesses strikes a chord with me. It feels more personal, as I now possess a broader understanding of what it means from an operations standpoint when global risk factors such as violence and conflict emerge and confront one’s own international endeavors, in both the business world and from a mission’s standpoint.
Explanation of the Key Term
The key term to be explored in this discussion board is Causes of Risk, from Chapter 3 of International Business with a Biblical Worldview (Satterlee, 2018). Causes of risk can be a variety of factors, a few of which are as follows: violence, conflict, acts of terrorism, kidnapping, confiscation, expropriation, and nationalism. The first four of these will be the primary focus of this discussion, and the next section will dive into these topics through the lens of an article specifically examining causes of risk.
Major Article Summary
The article to be discussed in this section is entitled, Business in Conflict-Affected and High-Risk Contexts (Vaughan, 2021). The article details what it means for a business to operate in a high-risk context, and outlines the various ways that companies can react to the ever-changing landscape of our world as things such as war, violence, human rights violations and other related factors threaten the effective operations of international businesses. The article explains that high-risk contexts include “situations of armed conflict and mass violence as well as areas with weak governance or rule of law; extensive corruption or criminality; significant social, political, or economic instability; historical conflicts linked to ethnic, religious, or other identities; closure of civic space; and a record of previous violations of international human rights and humanitarian law” (Vaughan, 2021, para. 4).
Special attention is given to human rights violations, and how conducting business in these high-risk contexts has a greater chance of contributing to abuses of human rights as business relationships are built in the midst of the conflict. Things such as job losses, land grabs, and other effects coming from anywhere in the supply chain can affect the nation and ultimately cause greater harm than good. It is imperative that an international business be able to operate within the UN Guiding Principles on Human Rights (UNGPs), in order to mitigate risk in the region and conduct business in a way that contributes to the health of the communities and country as a whole (Vaughan, 2021).
Despite the vast array of challenges faced by businesses operating in high-risk international environments, the article points out how a positive impact can be made when a company takes into account the major social and political impacts of their presence in the nation and discovers how to respect internationally recognized human rights. If decision-making is done in a strategic way, with careful consideration for what is happening in the nation, foreign investment can actually make a positive impact on individuals and communities. In referencing the Positive Peace Report 2020, the article states that private sector direct investments that reinforce “the attitudes, institutions and structures that create and sustain peaceful societies can help to prevent future conflicts and will contribute to an environment that enables both business success and protection of human rights” (Vaughan, 2021, para. 9).
In order for a business to build resilience to today’s challenges, the article goes on to describe a few key strategies, some of which are as follows: identify and monitor high-risk contexts, identify and prioritize human rights risks, engage with local stakeholders regularly, and anticipate crisis before they occur in order to develop contingency procedures and respond effectively.
If a global business is able to strategically adapt operations in a high-risk context while protecting human rights and adding value to these communities, that company has potential to build strong relationships and be extremely successful in the region in which it operates. The next section will discuss the perspective of this article alongside other research on the topic of global causes of risk.
Discussion
In discussing the results of this article, there are certain things which tie in with the other articles researched, as well as things which other articles placed a greater emphasis on in the realm of international business risk. The article by Vaughan (2021) and the report from the Institute for Economics and Peace (2020) both gave special emphasis to not only the risk associated with carrying out international business, but the opportunity as well. These sources both highlighted how peace in a society can often be linked to the economic stability of that nation, and when a business is able to add value to that economy while respecting the human rights of the people within the nation, the effects can be highly beneficial for all parties involved. The report from the Institute for Economics and Peace (2020) deals with the concept of Positive Peace, which it defines on page six as “the attitudes, institutions and structures that sustain peaceful societies.” It has been found that countries with higher levels of positive peace are statistically linked to higher GDP growth, greater environmental outcomes, better overall developmental outcomes and a stronger sense of resilience (Institute for Economics & Peace, 2020, p. 8).
Another article entitled Risk Management in International Business by Hou (2013) focuses on the economic side as it deals with causes of risk, examining topics such as currency exchange risk, translation issues, and other factors that must be taken into account by a business looking to expand internationally. The level of risk involved in these transactions can be linked to the country’s level of political and social risk at the time, heightening the need for businesses to be strategic in their foreign decision-making and diligent in carrying out foreign risk assessments of the countries in which they are involved (Hou, 2013, p. 24).
The final journal article entitled A Framework for International Risk Management in International Business by Miller (1992) builds upon the concepts of the first three, focusing attention primarily on the most strategic ways for a company to develop a plan to manage the risks it encounters in the international realm. The article discusses how a firm’s strategy ultimately deals with how it aligns with its uncertain environment, and how certain choices made by the firm expose it to uncertainties and potential risks (Miller, 1992, p. 312).
All of the articles dealt with the broader concept of risk, its causes, and its mitigation on the international scale. Within this discussion, special attention was given to topics such as violence, conflict, the protection of human rights, and the way that all of this plays a key role in how a global company should develop a plan to strategically face risk.
References
Hou, A. X. (2013). Risk management in international business. Society of Actuaries: Risk Management (27), 23-24.
Institute for Economics & Peace (2020). Positive peace report 2020: Analysing the factors that sustain peace. The Institute for Economics and Peace. Retrieved on September 9, 2022 from http://visionofhumanity.org/resources (Links to an external site.)
Miller, K. D. (1992). A framework for integrated risk management in international business. Journal of International Business Studies, 23(2), 311-331). https://www.jstor.org/stable/154903 (Links to an external site.)
Satterlee, B. C. (2018). International Business: with Biblical Worldview. McGraw Hill.
Vaughan, J. (2021). Business in conflict-affected and high-risk contexts. Business for Social Responsibility. https://www.bsr.org/en/our-insights/report-view/business-in-conflict-affected-and-high-risk-contexts

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