What forms of economic risk does a Multinational Corporation typically face?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are two major types of economic risk that are especially important of a multi-national corporation.  These are types of risk that are caused by internal factors on the one hand and external factors on the other.

Internal factors are factors that have to do with the economics (and to some extent the politics) of the country in which the MNC is operating.  For example, the country's exchange rate is an internal risk factor as are its government's spending policies.  If these change the MNC can be greatly affected.

External factors are not specific to the country.  These are things like natural disasters and the health of the overall global economy.  For example, an MNC operating in China could have been hurt by the global recession even though that event was not directly connected to the Chinese economy.

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