4. Sustainability in International Trade: The Importance of Political Risk Analysis

Sustainability in international trade is increasingly an important factor for companies. Political risk analysis has great importance in this context. Political risk analysis supports companies’ decision-making processes in international trade. This analysis helps them to determine the countries that are riskier to do business in and contributes to making strategic decisions to increase sustainability. Political risk analysis also guides companies in identifying markets that align with their sustainability goals. Companies need to make decisions based on political risk analysis results to minimize risks and carry out their business projects sustainably. Managing political risks positively affects the financial performance of companies. Minimizing risks increases confidence in long-term decision-making processes and makes businesses more attractive to investors. Companies can use political risk analysis to protect their supply chains against political risks that could threaten sustainability. Political risk analysis affects not only financial sustainability but also social and environmental sustainability. Within this scope the aim of this study is to examine the role and importance of political risk analysis for the sustainability of international trade. Political risk, political risk factors, the dimensions of political risk factors, and the relationship between political risk and sustainability in international trade have been examined in detail in this context. This relationship has been handled globally depending on the political risk comparison of countries. The study found that the most significant political risks are political instability, changing political regulations, and customs and trade restrictions. In addition, it has been observed that some countries have better policies and regulations on environmental and social sustainability issues. As a result, political risk analysis is a critical tool to help companies achieve sustainability goals in international business. It has also been considered that political risk analysis is very important in identifying potential risks, guiding decision-making processes, and increasing sustainability.