Political Risk Insurance Guide

by Daniel Wagner

The risk that an international business will encounter some form of loss due to political risks is high, particularly if it trades or invests in the developing world. That is not to say that there is no political risk implied when doing business in developed countries. There is no country on earth where political risks do not exist. For example, as a U.S. investor, you might think that Mozambique is a risky place to invest. Perhaps it is. But could the U.S. also be a risky place to invest? Just ask Iranian investors how accessible the financial assets they placed in the U.S. prior to 1979 have been. The U.S. Government froze Iranian assets in the U.S. not long after the Shah fell from power. Let's say you have invested in a mine in Canada. Your operation is going smoothly for several years. Then, the Canadian economy starts to go sour and an election year approaches. As the owner of the mine, you decide you need to lay off a substantial portion of your workforce in order to remain viable. Your mine just happens to be in an important province which the current ruling party believes it must win in order to win the national election. Learning of your plans to lay off workers, the government nationalizes your mine to prevent you from laying off the workers, removing the possible negative impact such an action could have on its ability to carry the province in the election. You get a sense now of how a seemingly benign action on the part of an investor can lead to a politically risky scenario. The risks are real.

115 pages, Paperback

Published September 15, 1999

About the author

Daniel Wagner is the CEO of Country Risk Solutions, Managing Director of Multilateral Accountability Associates, and has more than three decades of experience assessing cross-border risk. He is an authority on political risk insurance and analysis and has worked for some of the world’s most respected and best-known companies, including AIG, GE, the African Development Bank, the Asian Development Bank, and the World Bank Group. In 2023 he was Adaptation Finance Lead and Technical Advisor on Private Capital Mobilization for COP28 in Abu Dhabi. Prior to that he was Senior Investment Officer for Guarantees and Syndications at the Asian Infrastructure Investment Bank in Beijing and Abu Dhabi.

Daniel has published 12 books – The New Multilateralism, Tales from Inside, Decision-Making in the Polycrisis Era, The Chinese Epiphany, The Chinese Vortex, The America-China Divide, China Vision, AI Supremacy, Virtual Terror, Global Risk Agility and Decision-Making, Managing Country Risk, and Political Risk Insurance Guide – as well as more than 700 articles on current affairs and risk management. He is a regular contributor to such publications as the South China Morning Post, Sunday Guardian, Diplomatic Courier and Fair Observer, among many others. For a full listing of his publications and media interviews please see www.countryrisksolutions.com.

Daniel holds master’s degrees in international relations from the University of Chicago and in international management from the Thunderbird School of Global Management. He also has a bachelor’s degree in political science from Richmond University in London.