A political risk insurance policy can cover a variety of risks and is tailor-made to your requirements.

Insurers we work with have various appetites and ways of insuring political risks. Policy holders can often choose smaller or larger risk sharing options. Typically, this kind of insurance covers equity or loan investments from acts of host governments resulting in confiscations, nationalisations, selective discrimination against a business compared to how other businesses are treated in the country, currency inconvertibility or transfer restrictions, acts of war and various forms of political violence amongst other events.

This product essentially protects the parent company against a catastrophic loss of its subsidiary's or JV's value in the country of operations. Multinational companies and even companies with just one subsidiary in an emerging market would be well-advised to seek protection against such events that are capable of erasing the value of a significant part of their business literally overnight, impacting their financials as well as stock price.

Equally, financial institutions we work with that lend to borrowers in emerging markets are often inclined to isolate and get rid of the political risk factor in their lending decisions. The relatively low cost of such cover compared to the banks' margins on the underlying loans makes it a very beneficial investment when managing the risks that the FI is exposed to and allows it to do more business in a particular economy without country limit issues.