- The mitigation of country risk using political risk insurance has long been undervalued by foreign direct investors but may prove critical if governments are to mobilize financing in support of their recoveries from the COVID-19 pandemic.
- While the market intuitively understands the benefits of political risk insurance, it is often perceived as an "expensive" cost for a project, because the upside financial benefits of coverage have not been adequately quantified in the valuation process.
- A "bottom-up" approach to financial valuation demonstrates that political risk insurance typically reduces the Country Risk Premiums and credit score equivalent of an emerging market investment.
For further details see:
Political Risk Insurance For Investment Decision-Making