- 1、下载文档前请自行甄别文档内容的完整性，平台不提供额外的编辑、内容补充、找答案等附加服务。
- 2、"仅部分预览"的文档,不可在线预览部分如存在完整性等问题,可反馈申请退款(可完整预览的文档不适用该条件!)。
- 3、如文档侵犯您的权益，请联系客服反馈,我们会尽快为您处理(人工客服工作时间：9:00-18:30)。
The reasons for that may be because of insufficient funding, or change of the ideas of the managemenwenku.baidu.com or simply cheat the other party.
For whatever motivation, consider Figure 14.1
Micro-level risks focus on sector, firm, or project specific risk. An examination of these types of political risks might look at how the local political climate in a given region may affect a business endeavor.
Interest rate risk
Equity risk
Currency risk,
Commodity risk
Social and cultural factors are those issues that relate to physical and attitudinal changes in populations.
One most prominent feature of social and cultural factors is its diversity. Once again these provide opportunities as well as threats or risks for negotiators.
1. Information asymmetry
One single most important source of risks for negotiators is information asymmetry, which deals with the study of decisions in transactions where one party has more or better information than the other.
Natural disasters:A natural disaster is a major adverse event resulting from natural processes of the Earth
Economic environment: all business are affected by the economy--locally, nationally and internationally.
such a case often happens that one party may not be trustworthy, which is that there typically are incentives for negotiating party that enter into coordination agreements to not be able to implement the agreement.
Mistrust can be a source of risk and cause negotiations to fail.
One important reason giving rise to mistrust is that some negotiators are only obsessed with using tricks and cynical ploys to throw others off track when negotiating,
The cost of fraud is very high. The typical organization loses five percent of its annual revenue to fraud, with a median loss of $160,000
Case: One steel plant in Ukraine
This Chapter categorizes the risk stemming from differences from social-cultural factors as the following:
Values Cultural symbols Professional culture
Party A Does not Coordinate
Party A Coordinates
Party B Does Not Coordinate
Party A’s Profit = 75 Party B’s profit = 75
Total profit = 150
Party A’s Profit = 25 Party B’s profit = 150
1. Political risk
political risk refers to the complications businesses and governments may face as a result of what are commonly referred to as political decisions—or “any political change that alters the expected outcome and value of a given economic action by changing the probability of achieving business objectives”
Total profit = 175
Party B Coordinates
Party A’s Profit = 150 Party B’s Profit = 25 Total Profit = 175
Party A’s profit = 100 Party B’s profit = 100
Total profit = 200
Internal risks refer to those risks specifically occurring in the process of the negotiation and have direct impacts on the result of the negotiation.
Outright lies and deceptions to fool you, power plays to intimidate you, and surprise moves to confuse you
Unscrupulous negotiators have a wide variety of manipulative tactics at their disposal--from lying and verbally abusing their negotiation counterpart to using various forms of pressure to make you feel uncomfortable
Typical examples of information asymmetry are adverse selection and moral hazard.
Adverse selection refers generally to a situation where sellers have information that buyers do not have, or vice versa, about some aspect of product quality
There are both macro- and micro-level political risks
Macro-level political risk looks at non-project specific risks. Macro political risks affect all participants in a given country.
Negotiation Risks and Management
A common definition of the risk is the possibility that an event will occur and adversely affect the achievement of an objective or a deviation from an expected outcome. So risks involves interaction with uncertainty.
The negotiation risk is defined as the possibility that negotiators are unable to realize their objectives fully or partly due to the uncertainty occurred in the process of negotiation and in the implementation phases.
Moral hazard Adverse selection is related to the concept of moral hazard. In moral hazard the ignorant party lacks information about performance of the agreed-upon transaction or lacks the ability to retaliate for a breach of the agreement.
Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved. The most commonly used types of market risk are:
Objectives-based risk Scenario-based risk identification Taxonomy-based risk identification Common-risk checking Risk charting
This book chooses those which have high correlation with negotiations and puts them into four categories as political risks, market risks, social and cultural risks and environmental risks.
The worst case of information asymmetry may occur when one party intentionally cheat the other party in the negotiation. In law, fraud is deliberate deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.
The environmental uncertainty issues not only include those natural disasters stem from climate changes, weather and geographical locations but also the way of doing business environment friendly.
