Risk and Foreign Direct Investment - Index of

events, of differing provenance, which occur within that environment
and constitute a significant part of that instability; in so far as
they also have an impact on the operation of the enterprise they
create risk. 2
The level of uncertainty is never binary, there is never a simple
either/or situation. Such a binary position grossly oversimplifies the
world. In reality, there is neither zero uncertainty (complete certainty),
nor on the other hand complete uncertainty (complete ignorance)
(Courtney, Kirkland and Viguerie 1997). The world has regularities
which are the basis of the possibility of meaningful strategy. Complete
uncertainty is a situation which entails what Shackle calls ‘powerless
decision’ and can be disregarded.
In terms of the managerial perception of these events and their
outcomes there are four possible states of affairs (Kobrin 1979):
• a nearly definite future,
• a number of discrete alternative possible futures (scenarios),
• a broad but continuous range of possible futures with clear boundaries
which demarcate what is impossible,
• an ambiguous future fraught with unknowns, that is a nearly
complete uncertainty.
Incidence, impact and response: the universality of risk
The diagram below articulates what has been the source of much of the
confusion concerning risk, a failure to identify the difference between
the defining characteristics of the concept and the causes and consequences
of different levels, or changes in the level, of risk. It is possible
to link causes, characteristics and consequences with incidence, impact
and response in a simple way.
Defining risk.
Risk and Risk-generating Events 29
Causes A set of risk-generating events Incidence
or changes in behaviour,
sometimes called shocks
usually interacting closely
with the relevant contexts
Characteristics Significant unpredictability Impact
of a key performance
indicator(s) which indicates