Geopolitical tensions and macroeconomic volatility are creating uncertainty around the globe, making political risk management and insurance increasingly critical. A Howden survey found that 51% of multinational companies suffered a political risk-related loss to their international investments between 2020 and 2025.
The most frequently reported causes for losses were: difficulties exchanging local currency to repatriate funds (40%); foreign government interference with ownership rights (40%); and being forced to abandon foreign assets because of political violence (33%). Foreign government interference resulted in the costliest average losses at $19.8 million, followed by currency conversion issues at $16.4 million and political violence at $14.3 million.
Companies with political risk insurance reported losses that were $1.4 million lower on average than those without coverage. In addition to insurance, 80% of companies are planning to adopt other risk management tools to help mitigate political risk losses like scenario-planning methodologies, geopolitical issue tracking and data analytics.