Research On The Method Of Geopolitical Risk Assessment

Since the end of the World War II, the speed and scale of capital flows continuesto expand. But as time progresses, capital did not flow from capital-abundant areas tocapital-lacking areas as expected. Reasons for this phenomenon are occurring, inaddition to general economic risks and capital operational risks, the risks frompolitical level accounted for a large part of the ratio. With the further advance ofglobalization, riots and crises occur frequently featuring by high-threatening, fastproliferating and high urgency challenge the free flows of capital significantly. Toeffectively assess and respond to risks from the political level, turns to be a veryimportant issue in international relations.In the history of political risk assessment studies, there have been some basic riskassessment models, such as BERI index, EIU Economist index and PRS GroupCountry Risk Guide, and so on. This paper will firstly demonstrate and analyze pastresearches on political risks as well as several successful operating commercialpolitical risks assessment models, explicating the advantages and disadvantages ofthese studies and political risk assessment models, and then with a sort of historicalresearch, a geopolitical risk assessment integrated assessment model is put forward,which integrates traditional political risk factors, geopolitical factors, economy andsocial violence factors. This integrated model provides a more comprehensive andaccurate assessment of the geopolitical risks impact on investment. It should be notedthat, for the accuracy and academic rigour considerations, constructing political riskassessment models should consider geopolitical factors as an important factor infuture.In addition, this paper also believes that efforts should not be only focus on themechanism and the possibility of political risks, but also be made in proper coppingwith by summing up a set of rules and patterns practically. A set of comprehensivepolitical risks responding measures including legal, cultural and risk-awarenesscountermeasures has been provided in this paper, which makes the model moresignificant.