In the last decade with recent events in Middle East and North Africa, the developed countries try to confront its economic problems, ongoing geopolitical changes in Asia.
Many investors are in trouble to doing business with these countries, because of that taking a proactive method to tackling political risk is a part of any international risk management strategy.

Adverse regulatory or legal changes, terrorism, license cancellation, civil disturbances, embargo and sanctions, expropriation/nationalization of assets, inability to convert and transfer currency, sovereign non-payment, civil war and interstate war are top 10 risks with highest finance impact.

Which regions contain the highest level of political risk?

-Middle East North Africa 40%
-Europe 22%
-Russia and Commonwealth of independent states (CIS) 14%
-South America 12%
-Sub-Saharan Africa 10%
-North America 4%

Asia had the most Country Risk Rating changes in 2015, with more upgrades than downgrades. China was the largest country to experience a risk rating change. African scores were relatively stable after several years of downgrades. The Caribbean had two upgrades. There were no changes in the Commonwealth of Independent States.
Eight countries were reduced in political risk: China, Ethiopia, Haiti, Iran, Jamaica, Nepal, Pakistan and Serbia.

Four countries were downgraded (experiencing an increase in political risk): Cape Verde, Micronesia, Philippines and Suriname.

Several of the country risks associated will not be covered by a standard property all risks policy or a standalone terrorism policy, but they can be covered with a Political Risk Insurance policy offered by many international companies.

Multinational risk professionals must now be prepared for any type of political or economic risk threat in both developed and emerging markets.

The research examines political risk in 162 emerging economies namely: exchange transfer, sovereign non-payment, political interference, supply chain disruption, legal & regulatory risk, political violence, risk of doing business, banking sector vulnerability and inability of government to provide stimulus.

Political risk insurance companies are designed to provide broad cover against the risk of losses arising from government action, political and economic confusion in a foreign country.

How can insurance protect these companies?

Political Risk Insurance can protect companies operating internationally against the negative effects of arbitrary government action. The important thing to remember is that cover is far more widely available and terms far more attractive before the investment climate deteriorates and the country of risk is in the press for taking action unfriendly to investors.

Specific perils that can be covered include:

• Confiscation, Expropriation and Nationalisation
• Selective Discrimination
• Forced Divestiture
• License Cancellation and Breach of Contract

In Italy the SACE Group is the Italian leader in credit insurance, investment protection and contractual guarantees through its coverage of political and commercial risks. The Group provides assistance to customers in over 150 countries. With a complete range of insurance and financial products, SACE guarantees more stable cash flows by transforming insolvency risks of partners into business development opportunities.

Fonte: a cura di Exportiamo, di Morvarid Mahmoodabadi, redazione@exportiamo.it

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