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The 10 Most Common Misconceptions About Political Risk Insurance
The GPRA Group Rod Morris Insurance Advisory Services The 10 Most Common Misconceptions about Political Risk Insurance
About us Political and Trade Risk Analysis Insurance Advisory Services Micro Political Risk Data Modeling In-Country Support
Rod Morris Vice President and Managing Director of Political Risk Insurance for Overseas Private Investment Corp. (OPIC) Chief Regulator for Captive Insurance for the State of Arizona Senior Vice President of CNA International and Risk Management Operations
Foreign direct investment risks Economic Regulatory Social Legal Operational Currency Tax Security
Macro and micro risks Breach of Expropriation Contract Regulatory National- Change ization Currency Confiscation Transfer War/Terror /Civil Strife Protectionism
Political risks of most concern to investorsover the next 12 months (MIGA)70%60%50% Regulatory Change Breach of Contract40% T&C Civil Disturbance30% Expropriation20% Terrorism/War MIGA Data10%0% 7
Foreign investor losses over the past 3years40%35%30% Breach of Contract25% Regulatory Change T&C20% Civil Disturbance15% Expropriation War/Terror10% MIGA Data5%0%
Common Approaches to Dealing WithPolitical Risk Create joint venture or alliance with local company Subscribe to sovereign risk reports Establish relationships with government leaders USEFUL BUT… INSUFFICIENT
Recap PRI is insurance, not a guarantee Political risk can be mitigated but PRI is still evolving and misunderstandings are common. Conduct independent political risk analysis Re-evaluate current policies annually Consult a professional, experienced advisor