Conceptual Model for Assessing Political Risks in Cross-Border Investments

• Author(s): Melvin J. Oshomegie; Ayomide Kashim Ibrahim; Omodolapo Eunice Ogunsola
• Paper ID: 1711041
• Page: 482-493
• Published Date: 31-10-2019
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 3 Issue 4 October-2019

Abstract

Political risks remain among the most critical uncertainties shaping cross-border investment decisions. From regulatory shifts and trade sanctions to expropriation and social unrest, these risks impose significant costs on investors while complicating strategic planning. Although financial risk models have achieved sophistication, political risk assessment often lacks standardized frameworks, relying instead on fragmented indices, expert judgment, or scenario analysis. This paper develops a conceptual model for assessing political risks in cross-border investments, synthesizing theoretical insights and empirical findings into a structured evaluative approach. The proposed model integrates dimensions of political stability, regulatory quality, institutional strength, geopolitical dynamics, and socio-cultural volatility, offering a multidimensional lens for risk evaluation. Using a structured literature review and comparative synthesis, the methodology identifies key risk factors and categorizes them across systemic, country-specific, and transaction-specific levels. The results highlight the necessity of blending quantitative indicators with qualitative judgment while emphasizing adaptive monitoring mechanisms. The discussion explores the implications of the model for investors, policymakers, and international organizations, stressing the balance between predictive capacity, transparency, and contextual adaptability. Ultimately, the paper argues that effective political risk assessment requires interdisciplinary approaches, integration of dynamic datasets, and continuous recalibration to evolving global conditions.

Keywords

Political Risk, Cross-Border Investment, Conceptual Model, Risk Assessment, Institutional Stability

Citations

IRE Journals:
Melvin J. Oshomegie, Ayomide Kashim Ibrahim, Omodolapo Eunice Ogunsola "Conceptual Model for Assessing Political Risks in Cross-Border Investments" Iconic Research And Engineering Journals Volume 3 Issue 4 2019 Page 482-493

IEEE:
Melvin J. Oshomegie, Ayomide Kashim Ibrahim, Omodolapo Eunice Ogunsola "Conceptual Model for Assessing Political Risks in Cross-Border Investments" Iconic Research And Engineering Journals, 3(4)