Advanced English Dialogue for Business – Legislative risk

Listen to a Business English Dialogue about Legislative risk

Stephen: Hi Violet, have you heard about legislative risk in finance?

Violet: No, Stephen, I haven’t. What is legislative risk?

Stephen: Legislative risk refers to the potential for changes in laws or regulations that could adversely affect the value of investments or businesses.

Violet: That sounds concerning. Can you give me an example of legislative risk?

Stephen: Sure, Violet. For example, if a government introduces new taxes or regulations that increase operating costs for a particular industry, it could negatively impact the profitability of companies in that sector.

Violet: I see. How do investors mitigate legislative risk?

Stephen: Investors can diversify their portfolios across different industries and regions to reduce the impact of any adverse legislative changes on their investments.

Violet: That makes sense. Are there any other strategies to manage legislative risk?

Stephen: Yes, Violet. Some investors actively monitor political developments and lobby for policies that are favorable to their investments. Additionally, investing in companies with strong legal teams and lobbying power can help mitigate legislative risk.

Violet: Thank you for explaining, Stephen. It’s crucial to consider legislative risk when making investment decisions.

Stephen: Absolutely, Violet. Legislative risk is an important factor that investors should always keep in mind to protect their portfolios. If you have any more questions, feel free to ask!