Systematic Risk influences a large number of assets. (e.g. political events) It is virtually impossible to protect yourself against this type of risk.

Unsystematic Risk or “specific risk” affects a very small number of assets. (e.g. news that affects a specific stock such as a sudden strike by employees)

Credit or Default Risk: the risk that a company or individual will be unable to pay the contractual interest or principal on its debt obligations.

Country Risk: This refers to the risk that a country will not be able to honor its financial commitments.

Foreign Exchange Risk: currency exchange rates can change the price of the asset as well.

Interest Rate Risk: A rise in interest rates during the term or debt securities hurts the performance of stocks and bonds.

Political Risk: The financial risk that a country’s government will suddenly change its policies.

Market Risk: The day-to-day fluctuations in a stock’s price. (Volatility)

An international firm must obey the laws not only of its home country but also of all the host countries in which it operates.

Questions about whether parent companies are responsible for the activity of their foreign subsidiaries arise in ib.

It is difficult to decide which country’s courts and laws apply in any one situation.

Based on tradition, precedent, and custom/usage.

Based on the officially established rules governing the faith and practice of a particular religion.

Corrupt behavior reduces economic growth and can destabilize governments.