POLECON 584: Managing Global Political Risk (syllabus)

Stanford Graduate School of Business
Winter 2016




Dr. Condoleezza Rice

The Denning Professor in Global Business and the Economy and
Denning Director for the Center for Global Business and the Economy
Executive Assistant: Caroline Beswick, beswick@stanford.edu (650) 723-6867

Dr. Amy Zegart
Professor of Political Science, by courtesy

Co-director, Center for International Security and Cooperation (CISAC)
Davies Family Senior Fellow, The Hoover Institution
Research Assistant: Taylor McLamb, twj@stanford,edu (650) 723-1395
For scheduling office hours: Russell Wald, rwald@stanford.edu

Course Assistants:

Taylor McLamb, twj@stanford.edu

Julia Payson, jpayson@stanford.edu

Katherine Boyle, kmboyle@stanford.edu

GSB Faculty Assistant: Sandra Berg, Office: E372, (650) 723-4494


In today’s globalized world, business success hinges on understanding politics as well as economic fundamentals.  As supply chains grow longer and more far-flung, potential nodes of disruption are proliferating.  Unrest in Yemen can hurt tea farmers in Kenya. Currency devaluation in Indonesia can affect textile manufacturing in Hong Kong. Even targeted covert operations like the Stuxnet virus to sabotage Iran’s nuclear weapons program did not stay targeted or covert for long, infecting computers in more than a hundred countries. At the same time, globalization and social media have given local stakeholders international reach, creating an environment where the politics in one location can have cascading effects elsewhere – whether it’s the spread of Tunisian protests in the Arab uprisings or a British NGO’s successful campaign to ban the sale of “conflict diamonds” from war-torn African countries. Today, political risk is no longer just about a foreign country’s tax system, regulatory environment, or threat of expropriation.  Instead, hard security challenges -- such as wars, civil unrest, cyber threats, terrorism, and insurgencies -- pose a distinct and increasingly important set of political risks and opportunities for global businesses. In this short course, we examine these hard security challenges and how businesses can deal with them. Our first session examines traditional security issues and the fundamentals of risk assessment by exploring the challenges of partnering with military-backed venture in Burma and the options for a foreign cruise line dealing with the rising drug violence in Mexico. Our second session examines emerging political risks posed by new technologies, focusing on cybersecurity. Our third and final session turns to political opportunity, exploring how firms consider doing business “on the frontier of the frontier” in countries like Iraq and Poland. Sessions include customized case studies and mini-simulations for students to walk in the shoes of managers confronting these challenges.


·      Readings are assigned for our first class. Please be sure to read them before class meets on February 22nd.

·      Each student will be emailed an assigned role and background information for our first class simulation in advance. Do not share this role information with classmates or meet in your teams before class begins February 22nd.


This is a Pass/Fail course. Grades will be based on class attendance, class participation, and a final 5-page, double-spaced writing assignment due Monday, February 29th no later than 5:00 p.m. Submission instructions and topic are to be announced. Attendance at all three-class sessions, from start to finish, is required.

Students are expected to master the content of the assigned readings, to make constructive contributions to class discussions, and to participate fully in class presentations, exercises, and simulations.

Students will be assigned to different simulation teams for each class.  For the first simulation only, students should NOT meet before class or discuss their roles/specific information with anyone else. For the other two simulations, students are encouraged but not required to meet with their teams before class to prepare.  Reading and research beyond the assigned materials is not discouraged.


Office Hours: Given the rigor of the course, no office hours will be held during the week of instruction. After the course, office hours will be held by appointment. To schedule, students should contact Caroline Beswick (beswick@stanford.edu) in Dr. Rice’s office or Russell Wald (rwald@stanford.edu) in Dr. Zegart’s office.

Technology Policy: Recording devices of any kind (cameras, tape recorders, etc.) are prohibited to ensure a frank and candid discussion during each class session.

Course Assistants: Julia Payson, Taylor McLamb, and Katherine Boyle will be handling logistics and are available for consultation on any issues pertaining to the class. Email: jpayson@stanford.edu; twj@stanford.edu; kmboyle@stanford.edu


Monday, February 22nd, Session 1:


·      Case: Political Risk in Burma

·      Simulation:  Triton Cruise Line Confronts Rising Violence in Mexico
 NOTE: Do not share role information or meet in teams before class begins.

·      Condoleezza Rice and Amy Zegart, “What is Political Risk,” Unpublished manuscript, February 2016.

Learning Objectives:

·      Understanding changes in the security environment since the Cold War and why political risk matters more now

·      Understanding why assessing political risk is hard but not impossible (cognitive, organizational challenges; how to deal with black swans)


Wednesday, February 24th, Session 2:


·      Case: A Tale of Two Data Breaches: Developing a Cybersecurity Risk Strategy.

·      Simulation:  Frizzle’s Cybersecurity

·      Michael Hayden, “The Future of Things ‘Cyber,’” Strategic Studies Quarterly, Spring 2011

·      Leslie Gaines-Ross, “Reputation Warfare,” Harvard Business Review, December, 2010, Prod. #: R1012D-PDF-ENG

Learning Objectives:

·      Understanding complexities and risks of cybersecurity challenges

·      Understanding the framework for developing effective political risk assessment capabilities and best practices


Friday, February 26th, Session 3:


·      Simulation: Engyn in Iraq

·      Gayle Lemmon, “Entrepreneurship in Postconflict Zones,” Council on Foreign Relations Working Paper, May 2012

Learning Objectives:

·      Understanding the upside potential of political risk, even in extreme situations

·      Understanding political trends and power dynamics that are likely to shape the global economy moving forward as well as potential paths in key regions