Geopolitical risks are on the rise and growing more complex, making global business operations more challenging. Political risk insurance can help protect companies against the financial impact of adverse political events.
Political risks are inherently difficult to predict and past events are not a reliable indicator of what will happen in the future. While investing in developing markets can offer attractive new revenue and margin opportunities, it can also present a variety of political risks that are beyond an investor's control and can quickly leave them facing a loss.
Common political risk scenarios
- A change of government may result in the confiscation of a business’ assets.
- A loss of a license could deny a company the right to export its goods.
- Political violence could result in the destruction or temporary damage to assets.
These risks can have lasting financial consequences, but specialist political risk insurance can mitigate them.
What does political risk insurance cover?
Political risk insurance typically covers:
- Confiscation, expropriation and nationalization
- Deprivation
- Forced divestiture
- Selective discrimination
- Forced abandonment
- Export embargo
- Breach concession
- License cancellation/revocation
- War
- Political violence (including terrorism)
- Business interruption (BI)
- Currency inconvertibility/exchange transfer
Who is political risk insurance for?
Any organization:
- Investing in emerging markets
- Leasing equipment overseas
- Negotiating contracts for goods/services to foreign governments or state-owned companies