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Political Risk

Rising geopolitical tensions, commodity-price volatility, political violence, and separatist movements are exacerbating political risks globally for foreign investors.
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As the geopolitical landscape becomes increasingly uncertain, multinational organisations and financial institutions have elevated their awareness of the inherent challenges faced when conducting business in areas of concern. Seemingly tranquil countries and regions can erupt quickly, and the nature of events is increasingly unpredictable. The risk of business interests being concentrated in just one, or a few, regions is an issue among companies that operate in emerging risk areas.

In the realm of political risk, where coverage is often difficult to write, Marsh can assist you in managing issues across multiple markets and regions worldwide. We can help you negotiate a suitable policy to cover the risks you face and safeguard against disputed claims. Our team of globally-connected experts offers the talent, thought leadership, and geographic coverage to access solutions from multilateral agencies and development banks, which can offer cover in particularly difficult jurisdictions.

Our areas of expertise include:

  • Financial institutions – trade, commodity, export, and structured and project finance.
  • Trading houses – stocks, fixed assets, and non-payment.
  • Corporates.

With a combination of local expertise and a global footprint, we can obtain the capacity you need at terms that meet the unique needs of your organisation; we are often placing policies with limits of over US$1 billion. This enables you to reduce the total cost of risk, while protecting your assets.

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US$350

billion in coverage placed globally for political risk and structured credit clients

billion in coverage placed globally for political risk and structured credit clients

150+

A dedicated team with over 150 colleagues in 28 countries

Political risk is the probability of disruption to the operations of multinational enterprises caused by political events occurring in-country or by changes in the international environment. Your organization may face political risk in any country where you have operations, assets, contracts, or investments.

Political risk insurance (PRI) serves to indemnify institutional investors, businesses, or financial institutions from government actions that lead to significant monetary losses. 

PRI coverage acts as a safety net against policy decisions or actions by a government or political forces. It can cover risks such as:

  • Political violence, which typically includes civil war, coup d’état, insurrection, revolution, sabotage, strikes and riots, terrorism, and war that causes physical damage to, or abandonment of, assets or operations and the related loss of business income.
  • Expropriation by the government of assets or operations, including prevention of repossession of assets by a creditor.
  • Restrictions on the conversion of local funds to hard currency or the transfer of funds offshore as part of remitting dividends, debt service, or other cash flows generated in-country to an insured.
  • Arbitration award default if a government entity breaches its contractual obligations.
  • Credit risks, such as sovereign non-payment.

Any corporation (including commodity traders), bank, non-bank financial institution, or public agency with international assets or investments should consider political risk insurance. It is typically purchased in relation to project finance, asset finance, trade finance, fixed and mobile assets, and foreign direct investment, particularly in the oil and gas, mining, and infrastructure sectors. Depending on the risk, PRI coverage could involve public agency providers, private insurers, or a combination of both.

Incorporating PRI into your organization’s risk management program can help protect your contracts, investments, projects, operations, assets, equipment, and stocks of commodities in volatile markets. PRI can also facilitate debt financing, equity investing, and the backing of foreign projects or investments in higher risk countries.

Our people

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Tales Tzai

Practice Leader, Trade Credit & Political Risk and Structured Credit

  • Taiwan