When you expand your business overseas, via an offshore factory, warehouse or sales and marketing office, this decision involves a certain level of commercial risk.
Where your investments or assets are in a country with an uncertain political environment, they could also be exposed to political risks.
This is especially the case if you operate in emerging or frontier markets, with just some of the risks that have the potential to cause your business significant financial loss including:
- expropriation, which could involve the overseas government nationalising your investment or plant and equipment
- war damage
- political violence
- an inability to transfer or convert currency.
Political risk insurance (or overseas investment insurance) can help manage the risks associated with overseas investment or assets where those losses are due to certain political events.
This insurance can give you the confidence to undertake investment offshore to expand your export business or to participate in overseas projects.