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Protection in a Changing and Volatile World A Study of Political Risk Insurance Providers

M. Anaam Hashmi (Professor, International Business Finance, Mankato State University)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 April 1995

Abstract

A widely used strategy to cope with the dangers of foreign investment by hedging against potential losses is political risk insurance. All multinational corporations are subject to political risk perils. Political risk is defined as the adverse effect on the value of a business arising out of direct or indirect actions by a foreign government. Broadly speaking, there are six different types of political risk: confiscation, expropriation and nationalization; contract repudiation and frustration; unfair regulatory environment; currency inconvertibility; contingency; and war risk. Similarly, policies available can be defined according to these six categories. In summary, political risk insurance addresses losses which occur because of politically motivated decisions.

Citation

Anaam Hashmi, M. (1995), "Protection in a Changing and Volatile World A Study of Political Risk Insurance Providers", Managerial Finance, Vol. 21 No. 4, pp. 52-64. https://doi.org/10.1108/eb018512

Publisher

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MCB UP Ltd

Copyright © 1995, MCB UP Limited