3) Political risk is classified into three distinct categories such as firm-specific risks, country-specific risks and global-specific risks. It is critical that multinational enterprises (MNEs) accurately identify, measure and manage these risks if they are to succeed. A. Business-specific risks are known as microrisks; these political risks impact the multinational at the project or corporate level. The main firm-specific political risk is called governance risk and this arises from a conflict of objectives between an MNC and its host government. All multinationals should have internal political risk analysts who relate the macro risks attributed to specific countries to their particular characteristics and vulnerabilities. Even with the best possible company-specific risk, country-specific risks are known as macro risks; these political risks impact the multinational at the project or corporate level, but originate at the national level. The two main types of risks in this category are transfer risk and cultural and institutional risks. Transfer risk mainly concerns the issue of blocked funds, but also peripheral sovereign credit risk. Whereas cultural and institutional risks arise from ownership structure, human resources regulations, religious heritage, nepotism and corruption, intellectual property rights and protectionism. An example of country-specific risks was observed recently when Nepal was criticized for violating labor laws. Nike was largely affected by this and had to justify and demonstrate that it complied with all labor laws. Consumers, especially in North America, were concerned about purchasing products made in a country with inadequate labor laws and were considering boycotting Nike. Furthermore, the financing issue related to country-specific risks is the blocking of funds. The financial problem associated with blocked funds is that “when a government is short of foreign currency and cannot obtain additional funds by borrowing or attracting new foreign investment, it usually limits foreign currency transfers from that country.” Management can consider stranded funds in their capital budget analysis. Temporary blocking of funds normally reduces the expected net present value and internal rate of return of a proposal. Global specific risks are those political risks that affect the multinational at the project or company level but originate at the global level. Examples are terrorism, the anti-globalization movement, environmental concerns, poverty and cyber attacks. For example, the recent terrorist attacks in Brussels have disrupted the economic environment in Europe. The GBP/USD pair fell the most in a month due to the Brussels attacks and could potentially fall further. This FX risk impacts all businesses dealing with the GBP/USD currency pair. To manage specific risks globally, a multinational company should adopt a crisis plan to protect its employees and property and to ensure the integrity of its supply chain. However, multinational corporations largely rely on government to protect their citizens and businesses from specific global threats. In the case of specific risks at a global level there are no particular financing problems; no multinational has the tools to prevent terrorism, the fight against globalization, cyber attacks, poverty, etc. However, some of the minor financial problems are management disruption