CRA Emerging & Geopolitical Risks 2

Question 1

Which framework is most commonly used to assess a country's political risk exposure before entering a new market?

Accepted Answer

PESTLE analysis

Answer

PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis systematically evaluates macro-environmental factors including political risk in new market entry decisions.

Question 2

A multinational corporation's foreign subsidiary is nationalized by the host government without fair compensation. This is an example of:

Accepted Answer

Expropriation risk

Answer

Expropriation risk refers to the danger that a host government will seize foreign-owned assets, either with inadequate compensation (expropriation) or none at all (confiscation).

Question 3

The term 'gray rhino' in geopolitical risk analysis refers to:

Accepted Answer

A highly probable but neglected large-scale threat

Answer

A 'gray rhino' is a high-probability, high-impact threat that is visible and well-known yet tends to be ignored or underestimated until it charges.

Question 4

Which of the following best describes 'nearshoring' as a geopolitical risk mitigation strategy?

Accepted Answer

Shifting supply chains to geographically closer, lower-risk countries

Answer

Nearshoring reduces geopolitical supply chain risk by moving production or sourcing closer to the home market, reducing exposure to distant political instability and long logistics chains.

Question 5

An analyst notices that a country's government is increasingly controlling media narratives and judiciary appointments. From a risk perspective, this most directly signals:

Accepted Answer

Elevated rule-of-law and governance risk

Answer

Concentration of media and judicial control by the government signals weakening institutional checks, which elevates rule-of-law risk and makes contractual and legal protections less reliable.

(CRA) Certified Risk Analyst Practice Test

(CRA) Certified Risk Analyst Practice Test

CRA Emerging & Geopolitical Risks 2