Political Risk

The risk of loss or damage due to government regulations, regime changes, nationalization of industries, and war, among others.

Example:

You pay a visit to a developing nation which is home to unique archaeological sites.

Downside Scenario:

A political coup ensues, forcing you to evacuate and leave behind all your possessions.

Upside Scenario:

You are able to get a very close look at the most exciting archaeological digs in the world.

 

Related terms:

Legislative Risk

The risk of loss or damage due to government legislation.

Sovereign Risk

The risk that a sovereign government will not pay its debts.

Transfer Risk

The risk that funds situated in another country will be frozen.

Country Risk

A combination of risks inherent in dealing with another nation. Includes foreign exchange (FX) risk, sovereign risk, transfer risk, legislative risk, political risk.

Comments are closed.