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Political Risk
Practical Law Glossary Item 3-383-2210 (Approx. 3 pages)
Glossary
Political Risk
Risks faced by investors involved in cross-border transactions, including currency inconvertibility, expropriation, war and insurrection (such as a coup d’etat), terrorism, and actions of non-government activists, paramilitaries, or revolutionaries. To protect themselves from these risks, foreign investors can take several actions including:
- Obtain political risk insurance.
- Negotiate a stabilization clause (for example, an economic equilibrium or freezing clause with the local government).
- Structure the transaction to take advantage of a bilateral investment treaty.
For more information on political risks, see: