political risk

(economics) Economic risk resulting from the political decisions of sovereign governments as well as political and social events in a country. Political risks include confiscation, expropriation, nationalization, currency inconvertibility, contract frustration, war, civil unrest, revolution and annexation. Political risk can lead to the inability of a debtor to comply with a contract or to the loss, confiscation or damage to goods belonging to an exporter. An exporter may be able to cover this risk by utilizing a confirmed letter of credit or by applying for cover from export credit agencies. See commercial risk.

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