Political risk increases the cost of doing business, especially in foreign territories. This risk can include government instability, or other hostile conditions of doing business.

Investors, corporations, and governments can encounter political risk, which is the result of decisions made, but skewed, by politics. Energy companies continuously face political risk from unstable governments around the world. Political risk factors are important in any potential investment, because those risk factors can influence the end results of those investments.


"Political Risk" has a significant impact, so an analyst should put more weight into it. "Political Risk" will have a long-term negative impact on this entity, which subtracts from the entity's value. This statements will have a short-term negative impact on this entity, which subtracts from its value. This qualitative factor will lead to an increase in costs. This statement will lead to a decrease in profits. "Political Risk" is an easy qualitative factor to overcome, so the investment will not have to spend much time trying to overcome this issue.