Re-thinking country risk: insights from entrepreneurship theory

Though country risk analysis is a well-established field within international business, evidence indicates that established measures of country risk are unreliable predictors of actual volatility. Conventional strategies aimed at minimizing or otherwise avoiding downside risk are likely to yield limited results at best; at worst, these strategies will lead managers to miss entrepreneurial opportunities, which are likely to be greatest during conditions of disequilibrium. Drawing from entrepreneurship theory, I propose an alternative perspective from which to approach country risk. By focusing on both the downside and upside elements of country risk, strategies may be devised to harvest upside volatility while containing downside volatility. Rather than being something to always avoid, country risk becomes an opportunity to profit from uncertainty.