Final answer:
The correct answer is option d. A foreign terrorist kidnapping a firm's marketing VP is an example of political risk, which involves potential disruptions to business caused by political events or forces. Firms can mitigate these risks through various strategies such as purchasing insurance and performing risk assessments for international operations.
Step-by-step explanation:
The scenario described where a foreign terrorist kidnaps your firm's marketing VP while they are in the host country is a harsh example of a political risk. Political risks refer to the potential that a company's operations in a foreign country will be disrupted by political forces or events, whether they occur in the country or as part of international relations. This risk can be seen in various forms, such as terrorism, war, coups, and civil disturbances, which might affect business operations adversely.
Companies operating internationally must consider political risks as part of their strategic planning. Measures to mitigate these risks can include purchasing political risk insurance, diversifying investments, and conducting thorough country risk assessments before entering new markets. By doing so, firms can prepare for, or even avoid, some of the uncertainties that come with operating in the global marketplace.
In this specific instance, the appropriate response from the firm would include working with local authorities, international law enforcement agencies, and possibly crisis management teams to secure the safe return of the kidnapped individual. In addition, the firm may need to review and strengthen its policies regarding executive travel to high-risk regions.