A framework for political risk management and its application to the German-West African green hydrogen activities

• An advanced framework for political risk management. • Specific strategies and tools for firms and governments. • Use case of political risk in the German-West African green hydrogen activities. • Review of political risk management literature. The management of political risk is becoming an increasingly important topic for international businesses. Although the detrimental effects of political risk on international business have been the subject of studies for decades, strategies for mitigating such effects remain underresearched as well as specific tools to manage the relationships between firms and host governments. Methodologically this review article draws upon the combination of a semi-systematic literature review with a qualitative content analysis that examines 81 research papers. The synthesized findings provide an advanced framework for political risk management that includes the four key strategic directions: (i) improve the institutional framework, (ii) reduce transaction costs, (iii) manage external dependencies, and (iv) develop internal resources and capabilities. Under each key strategy, specific actor-based tools for firms and governments to manage and mitigate political risk were identified. Such tools and strategies are illustrated through the use case of German-West African green hydrogen activities as countries with a high renewable energy potential are exposed to higher levels of political risk. This review contributes a comprehensive, transferable, actor-based framework for political risk management that can serve as a guideline for firms and as hands-on guidance for policymakers