Country risk refers to the ways governments restrict, or fail to restrict, business activities. The nature of such restrictions varies around the world. In each country, national economic success substantially depends on the quality of laws and regulations.

Government must strike the right balance—too little regulation promotes uncertainty; too much causes hardship. Country risk is revealed in various ways.

• Foreign investment laws

• Controls on operating forms and practices

• Environmental laws

• Contract laws

• E-commerce laws

• Underdeveloped legal systems

• Accounting and reporting laws Conduct research online and give specific examples of each type of country risk. Describe how each might help or hinder company activities.

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