Political risk management during instability: the experience of readymade garment manufacturing firms in Bangladesh

Political risk is one of the major concerns for managers, particularly for those who conduct business in political volatile developing countries. This chapter examines the nature of political risks, their impact assessment process and risk management strategies in a developing country context. Using a multiple case study method for the readymade garment (RMG) industry in Bangladesh, the study discovered that political risks mainly arise from the nature of the political institutions and the governing system of a country; and its evolution as a political entity. The study also finds that institutionalisation of risk assessment is quite rare in developing countries, even for the mature industries. The risk management strategy depends largely on the political activities and connection of the firms. The lobbying power of the trade association is significant as well. Besides the theoretical contributions, this study offers a probability assessment method that is operationalisable in its original form or can be tailored to develop a bespoke risk assessment tool