Political Risk Insurance

In broad terms political risk can be characterised as the potential for government interference (physical or non-physical), government failure to honour contractual terms and/or violent events such as civil commotion, terrorism or political violence (which could come in the form of a rebellion, coup d’ état or even war) to harm commercial assets (financial, fixed/mobile) or individuals.

Heightened political risk is often prompted by the deterioration of the economic outlook for the country concerned and/or a worsening of its international relationships. In such circumstances, a variety of threats can materialise across the investment, trading and security environments and this is what political risk insurance is designed to mitigate. The tabs below give guidance on the different ways in which these broad concepts can affect a business.