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CIMAPRO19-P03-1 Exam - Topic 5 Question 93 Discussion

FGT is evaluating the political risks associated with its operations around the world.Which of the following would indicate that a particular subsidiary has a high level ofpolitical risk?
A) Forthcoming elections in the subsidiary's host country. and B) The subsidiary's host country requires the active participation of local partners before the subsidiary can operate. and C) Company law in the subsidiary host country is lax.
D) The subsidiary islocated a considerable distance from FGT's home country.
E) Thesubsidiary employs a large number of nationals from the host country.

CIMAPRO19-P03-1 Exam - Topic 5 Question 93 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 93
Topic #: 5
[All CIMAPRO19-P03-1 Questions]

FGT is evaluating the political risks associated with its operations around the world.

Which of the following would indicate that a particular subsidiary has a high level ofpolitical risk?

Show Suggested Answer Hide Answer
Suggested Answer: A, B, C

by Winfred at Jul 09, 2025, 01:50 PM

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Kassandra
9 months ago
Surprised that employing locals could indicate high risk.
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Meghan
9 months ago
Totally agree, political instability is a huge risk factor!
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Geraldine
9 months ago
I think local partner requirements can be a red flag too.
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Vannessa
9 months ago
Really? I thought lax company laws were a good thing.
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Margret
10 months ago
A forthcoming election usually means uncertainty.
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Marla
10 months ago
I’m not convinced that distance from the home country, like in option D, really indicates political risk. It seems more about logistics than politics.
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Halina
10 months ago
I practiced a question similar to this, and I think option C about lax company law could definitely signal high political risk. It makes me uneasy about compliance.
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Dalene
10 months ago
I'm not entirely sure, but I think having to partner with locals, like in option B, could also suggest a higher risk. It feels like it could complicate things.
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Lyndia
10 months ago
I remember discussing how forthcoming elections can create uncertainty, so I think option A might indicate high political risk.
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Aron
11 months ago
This is a good question to test our understanding of political risk. I'll make sure to carefully consider each factor and select the ones that are most indicative of high risk for the subsidiary.
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Ashanti
11 months ago
Okay, I think I've got this. Upcoming elections, local partner requirements, and lax regulations are all clear signs of high political risk. I'll make sure to select those options.
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Carri
11 months ago
Hmm, I'm a bit unsure about this one. I know political risk is important, but I'm not sure I fully understand all the factors that indicate high risk. I'll need to think this through carefully.
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Cecilia
11 months ago
This seems like a straightforward question about identifying political risk factors. I'll focus on the key factors like upcoming elections, local partner requirements, and lax regulations.
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Angelyn
1 year ago
Haha, C is a classic trap answer. 'Lax company law' might mean less red tape, but it could also mean less protection for foreign businesses. B is the way to go.
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Billy
12 months ago
I agree, C can be misleading. B seems like the safer option.
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Wilda
1 year ago
I think both factors are important in assessing political risk, along with the lax company law in the host country.
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Francesco
1 year ago
That's true, having to rely on local partners can make the subsidiary vulnerable to political changes.
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Taryn
1 year ago
But what about the requirement for local partners to operate? That could also indicate high political risk.
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Wilda
1 year ago
I agree with Francesco, political instability during elections can pose a risk.
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Francesco
1 year ago
I think forthcoming elections in the host country would indicate high political risk.
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Annette
1 year ago
D seems like an odd choice. Being far from the home country doesn't necessarily mean higher political risk. I'd go with B as well.
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Mariann
1 year ago
C) Company law in the subsidiary host country is lax.
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Jani
1 year ago
B) The subsidiary's host country requires the active participation of local partners before the subsidiary can operate.
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Lera
1 year ago
A) Forthcoming elections in the subsidiary's host country.
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Kimberlie
1 year ago
I think the answer is B. Requiring local partners indicates the government wants to maintain control and influence over foreign operations, which can increase political risk.
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Sabine
1 year ago
That's true, elections can bring uncertainty and instability, which are factors in political risk.
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Leigha
1 year ago
But what about forthcoming elections in the host country? Wouldn't that also indicate high political risk?
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Almeta
1 year ago
I agree, having local partners can increase political risk.
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