International Risk Overview

Principles

Definition

International risk is a concept and field of study concerned with identifying, assessing, and managing potential threats and uncertainties that arise from or operate across national borders. It investigates the sources, transmission, and impacts of adverse events or conditions that transcend single-state boundaries, encompassing diverse domains such as political instability, economic volatility, environmental hazards, and technological disruptions. A key characteristic is its focus on the interconnectedness and systemic implications of these transboundary challenges for states, organizations, and individuals, making its analysis significant for informing effective strategies and decision-making in a globalized world.

Ontological type

Core Dimensions

Assessment Methods

Governance Mechanisms

Key developments

Key Figures

Cross-Border Risk Pricing era

Philip Keefer [1] is a scholar affiliated with Cornell University [3] and the University of Maryland, College Park [4] during the Cross-Border Risk Pricing era. Keefer's 1995 paper INSTITUTIONS AND ECONOMIC PERFORMANCE: CROSS‐COUNTRY TESTS USING ALTERNATIVE INSTITUTIONAL MEASURES [6] illustrates how institutional quality helps explain cross-country variations in returns and informs cross-border risk pricing. Philippe Jorion [2] is affiliated with Cornell University [3] and Columbia University [5] in this era. His 1990 work The Exchange-Rate Exposure of U.S. Multinationals [7] analyzes how currency movements translate into exposure for U.S. multinationals and helps explain the pricing of exchange-rate risk across borders.

Contagion and Regimes era

Franklin Allen [1] is a leading economist focused on risk and financial stability during the Contagion and Regimes era, with affiliations at University of Pennsylvania [3] and the University of Cambridge [4]. His key contribution is the 2000 paper Financial Contagion [7], which articulated how shocks propagate through interbank networks in regime-switching environments and why such contagion matters for macroprudential design. Douglas Gale [2] has been affiliated with New York University [5] and California University of Pennsylvania [6] during this era. The co-authored Financial Contagion [7] paper helped formalize systemic spillovers and contagion channels, providing foundational insights that informed stress-testing, liquidity-risk assessment, and macroprudential policy in this era.

Global Financial Cycle era

Arshian Sharif[1], affiliated with ILMA University[3] and VIZJA University[4], contributes to the Global Financial Cycle literature by analyzing the COVID-19 pandemic, oil prices, stock market, geopolitical risk and policy uncertainty nexus in the US economy using the wavelet-based approach described in the paper[7]. This paper[7] highlights how time–frequency cross-asset linkages and regime-contingent policy shocks amplified risk premia during the 2020 episode, underscoring why monitoring cycle-sensitive spillovers is essential in this era. Chaker Aloui[2], affiliated with King Saud University[5] and College of Business Administration[6], contributes to the Global Financial Cycle literature by examining the same COVID-19 nexus through the wavelet-based perspective, illustrating the policy-uncertainty and energy-market dynamics that shaped risk premia in 2020[7]. For this era, Aloui[2]'s work, alongside Sharif[1]'s, helps policymakers and asset managers gauge cycle-sensitive spillovers and regime-driven exposures in the global financial cycle, as captured in the paper[7].