I.

POLITICAL

a. Political Stability
If the government has high political stability, it would create a healthy, stable, and
friendly environment for the business with predictable market growth trends. Thus, it
would attract investors on investing their money to the business and gain stakeholder’s
trust. Otherwise, political tensions and instability can affect the growth of the industry
and limit the growth opportunities of the business. This would also create major risks
that can harm not only the whole business but also its stakeholders.

b. Policy changes
Changing policies would harm the business if it is done frequently done normal. It is
difficult for Monte Carlo Simulation to predict the potential risks if there would be
frequent changes on the business trends in the country’s political scenario and would
alter the development of the business in the market.

c. Government System
A competitive and competent government with democratic political environment makes
the business more comfortable for Monte Carlo Simulation. A healthy environment
would be of help to predict the potential risks and avoid them for the success of the
business.

d. Corruption
Countries with high level of corruption can increase the potential risks that Monte Carlo
Simulation can predict and would make the business environment unstable. Also, the
citizen’s trust on its government would highly affect its trust on business organizations
and overall political and economic structure. Frequent lawsuits that can arise by
corruption due to fraudulent deals and licensing can threaten the stability and
sustainability of the organization.

e. Taxation Policies
Some countries which demand high taxation level for business can directly influence the
profitability of which. Thus, it would be difficult for Monte Carlo Simulation to occur.
High level of taxation would affect the trade and prevent exports. Understanding the
taxation policies would give knowledge for businesses on the government’s priorities
and interest in developing businesses on different industries.

II. ENVIRONMENTAL

A. Waste management and proper recycling

Adopting efficient waste management policies and recycling practices is highly crucial
for Monte Carlo Simulation. Many countries have places strict norms and policies to
 protect the environment through effective waste management. Also, proper recycling
should be a business norm for the organizations.

B. Weather and Climate Conditions

Frequent and unstable changes in the weather can affect the efficiency of the business.
Thus, it would be hard for Monte Carlo Simulation to predict potential risks that may
occur. Extreme weather conditions can increase the cost of operations. It would force
them to make the value chain more flexible. Such changes can influence the company’s
profitability, customers’ spending patterns that would cause the organizations to make
sudden changes on its product and marketing strategies.

C. Environmental Regulations
Monte Carlo Simulation must study the specific environmental regulations of the
country under consideration to understand which resources are considered rare and
which species are endangered whose excessive consumption can cause trouble for the
organization.