Political Risk Cover

What is Political Risk?

Trading outside the UK can bring many benefits and opportunities for business, but with these comes risk. Debt can be harder to collect, due to distance, language barriers, and the complexities of different legal systems, all of which can compound misunderstandings. However, with these dangers come the rewards – new, large marketplaces, a ‘spread’ of risk across a business, and enhanced profitability.

One of the risks faced are political, which can be broadly defined as an outside economic or political event that goes to frustrate a contract. These risks can expose a business to non-payment on trading risks, or the loss of assets overseas.

Trading Risks

Trading risks can include:

  • War
  • Currency transfer (inconvertibility)
  • Civil unrest
  • Action of a foreign government
  • Terrorism

Trading risks can be included under a more traditional credit insurance policy, which can also help with debt collection, and providing market information, including in depth economic analysis.  However, this may not be the appropriate route, particularly for larger one off contracts, and political risk cover can be sought independently.

Overseas Assets

Overseas assets may be permanent, such as buildings, or more temporary, such as plant and machinery, which may be leased to third parties. These can be exposed to the risk of expropriation or lost in war or civil unrest. This is an insurable risk.

How We Can Help

Through our London team and our sister company, W Denis Insurance Brokers, we have access to a wide range of specialist markets including Lloyds of London who can create tailored political risk policies. It’s always best to review the risks your business is undertaking in advance, so do contact us for a free risk review.