The risk of loss or damage due to government regulations, regime changes, nationalization of industries, and war, among others.

Example:

You pay a visit to a 3rd world country which has some very unique archaeological sites.

Downside Scenario:

A political coup ensues, forcing you to evacuate and leave behind all your possessions.

Upside Scenario:

You are able to get a very close look at the most exciting archaeological digs in the world. It is the culmination of a dream of a lifetime, and you are inspired to write a book.

Related terms:

Legislative Risk

The risk of loss or damage due to government legislation

Sovereign Risk

The risk that a sovereign government will not pay its debts

Transfer Risk

The risk that funds situated in another country will be frozen

Country Risk

A combination of risks inherent in dealing with another nation. Includes foreign exchange (FX) risk, sovereign risk, transfer risk, legislative risk, political risk

Return to Top