Reference no: EM132943149

As you know terrorism and kidnapping constitute the main source of political risk in global trade. The Suez shipping route is one of the most active routes used by commercial ships. Yet, these dangerous waters pose a major threat (of theft and kidnapping) to commercial sailors and the goods they transport."

Before answering the question, assume that ships have to go through the Suez route for this discussion. The reason for that is that other shipping routes between Asia and Europe are much longer and less economical (as ships have to go around Africa).

Question: In your opinion, what should shipping companies do to adapt to this threat? Present at least two things that could be done to lessen the piracy and kidnapping risk.

As noted in the text, there are many ways to adapt to political risk. Shipping companies could engage in any of the following activities: partner with a security firm, carry a large insurance policy, monitor pirates in the region and try to avoid them, modify some elements of their operations, assist poor communities in the region, etc.